* IPWireless expects 2012 revenues of $65 mln to $75 mln
* General Dynamics sees "double digit growth" in broadband
* Company eyes billions of dollars of orders for public
By Andrea Shalal-Esa
WASHINGTON, May 8 General Dynamics Corp,
one of the largest U.S. weapons manufacturers, said it plans to
acquire privately-held wireless network equipment maker
IPWireless Inc as defense spending in the United States begins
General Dynamics expects to complete the purchase of the San
Francisco-based company in the third quarter as it taps into "a
fast current of growth" in the rapidly expanding 3G and 4G
wireless market, said Gerard DeMuro, executive vice president of
the company's information systems and technology division.
He gave no details on the purchase price, but said
IPWireless, which has about 90 employees, was expected to
generate sales of $65 million to $75 million this year.
The acquisition would give General Dynamics a technological
and pricing edge in future upgrades to the secure communications
networks it already provides for the U.S. military and civilian
agencies such as the Coast Guard, Justice Department and
Department of Homeland Security, DeMuro said.
It will also help General Dynamics compete for billions of
dollars of orders as the United States moves to create a
nationwide broadband network for first responders over the next
10 years. Congress set aside funding and wireless frequencies to
build a national broadband network for first responders as part
of the payroll tax cut extension approved earlier this year.
"We're confident that this will bring us double-digit growth
in this...business segment which will be difficult to come by in
our traditional market, given the current fiscal constraints,"
The acquisition could provide a boost for DeMuro's
information systems division, which saw sales drop 13 percent in
the first quarter, and is now projecting a 5 percent decline for
the full year, down from earlier projections of flat sales.
DeMuro said the acquisition would help General Dynamics meet
growing demand from the U.S. military to expand fourth
generation capabilities to the battlefield, which could amount
to tens and tens of millions of dollars of new business a year.
Another main driver was the push for a national broadband
network dedicated exclusively to public safety, an area that
could generate $15 billion to $20 billion in new business in
coming years, according to some estimates.
Morgan Keegan recently outlined significant growth
opportunities in the public safety market, noting that to be
successful, companies would need significant expertise in the
wireless and first-responder end markets, as well as experience
building and maintaining networks.
DeMuro said the acquisition would give General Dynamics
valuable product content that it could adapt and integrate into
its proposals, setting it apart from other competitors like
Raytheon Co and Harris Corp.
"This is about keeping the portfolio relevant and
competitive in the near and long term," he said.
General Dynamics said IPWireless already provided equipment
and solutions to the military and first responders, including
the network used by all five boroughs of New York City, the
largest multi-agency government network in the United States.
It also provides the network for a wireless broadband
communications system in Adams County, Colorado, that is being
built by Raytheon. IPWireless components and systems allow first
responders to access data at very high speeds, including
real-time fingerprint identification and high resolution video.
DeMuro said the acquisition had been approved by both
boards, and IPWireless would be renamed General Dynamics
Broadband when the transaction was completed.