NEC Marries Convergys IM Business Unit to NetCracker

NEC Corporation, the parent company for NetCracker Technology, announced a definitive agreement today to acquire Convergys’ Information Management (IM) business. This business unit encompasses Convergys’ BSS solutions business; more specifically, its Smart Suite offerings that cross communications, utilities, and logistics industries. The IM business is distinct from Convergys’ massive call center-focused business, which remains with Convergys.

The value of the acquisition is stated at US$449 million. According to NEC and NetCracker, this acquisition makes the combined NetCracker-Convergys IM entity the largest, telecom-focused, software, services, data center, and R&D business in the world. On today’s conference call, the company cited projected 2012 revenues of roughly $2.5 billion.

The value of this acquisition will ultimately be in its performance. Convergys has a substantial BSS business with presence in key mobile and cable markets. On paper, it expands NetCracker’s revenue management footprint significantly and positions the joint business unit to capitalize on growth opportunities relating to payments, eCommerce, and digital content, among others.

But Convergys’ IM business has lacked direction and energy for several years, developing a reputation for inflexibility when it comes to adapting to new market realities and monetizing acquired assets. Whether NetCracker can inject energy, direction, and market victories into this business unit will determine the long term value of this move.

Chances are NetCracker will make this work. First, NetCracker has an entrepreneurial, growth-driven background. Andrew Feinberg has demonstrated that he knows how to lead a business through many stages of life. He and his executive team have a consistent vision into which the IM business fit well and can find direction. Second, NEC is a deep-pocketed parent with massive channels that make it easier to bring the value of this acquisition online. Third, the IM business unit should benefit from no longer being the red-headed step child within a company that really just wants to run call centers.

According to NetCracker, future acquisitions could be in the making – so stay tuned. NetCracker and NEC aren’t done yet. 2012 could be a very interesting year in the OSS/BSS space if their aggressive activity drives increased M&A action across the sector.

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About Edward Finegold 122 Articles
Ed is now Director, Strategy for NetCracker. Previously, for 15 years he was a reporter, analyst and consultant focused on the OSS/BSS industry and a regular contributor to BillingViews.

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