Determined to be among the leaders in the probe segment of the service management space, Ixia will pay $160 million in cash for BreakingPoint Systems Inc., when the definitive agreement announced this week is closed sometime this quarter.
Ixia is a provider of converged IP and wireless network test and visibility solutions. The acquisition of BreakingPoint enables Ixia to provide an end-to-end solution that monitors, tests and optimizes converged networks. BreakingPoint's solutions provide global visibility into emerging threats and applications, along with advance insight into the resiliency of an organization's IT infrastructure under operationally relevant conditions and malicious attacks. BreakingPoint's network processor-based simulation and testing platform creates global application and live attack traffic at Internet-scale for enterprises, service providers, and government agencies.
Vic Alston, president and CEO of Ixia, said the current threat landscape is changing the way business is conducted, how data is protected infrastructure is secured.
"This dynamic IT landscape is creating a growing demand for solutions that provide definitive and current insight into the resiliency of critical IT infrastructures and defenses. The use of disparate testing tools, threat intelligence, and monitoring products allows dangerous security vulnerabilities that erode the security posture of businesses and government agencies," Alston said.
BreakingPoint grew revenue over 40 percent in calendar 2011 to $33.5 million while generating gross margin of 87 percent for the year. For calendar 2012, Ixia expects BreakingPoint's revenue to again grow by more than 40 percent, and anticipates that the BreakingPoint transaction will be accretive to non-GAAP earnings in the first full quarter of operations after the acquisition closes.
Despite that growth, Patrick Kelly, research director at Analysys Mason, said the purchase price of $160 million was rich considering other acquisitions in the sector over the past two years.
“Ixia is growing market share via acquisitions, but still faces strong incumbents Tektronix, JDSU, and Netscout that are well entrenched in most Tier 1 service providers networks. The challenge will be to establish a beach head and keep it," Kelly said.
Kelly said revenue in the probe system sub-segment grew by 14 percent year-on-year. Most of this growth was influenced by mobile infrastructure monitoring of 3G/4G technologies. Activity was strong across many Tier 1 mobile CSPs.