(Adds details, analyst comments, conference call details)
By Supantha Mukherjee
BANGALORE Dec 10 PCTEL Inc (PCTI.O) said it
agreed to sell its mobility solutions group to Smith Micro
Software Inc (SMSI.O) for about $59.7 million in cash and plans
to buy back three million shares.
PCTEL, which makes telecommunications software and
hardware, said it will get about $42 million, after expenses,
from the sale of the business. It acquired it in 2002 for $1.5
Smith Micro is a diversified developer and marketer of
wireless communications software products and services and the
company said the move would help it expand its technology
"It's expensive, but it helps Smith Micro in many different
ways, Morgan Joseph analyst Kevin Dede said by phone.
"... And with proper execution on the acquisition it could
remove some of the operating costs and hopefully it will
translate into more profit," he added.
In a conference call on Monday, Smith Micro said following
the transaction it will add six Tier-I customers: AT&T Inc
(T.N), Sprint Nextel Corp (S.N), Britain's Vodafone Group Plc
(VOD.L), French telecoms operator Orange, NTT DoCoMo (9437.T)
and Deutsche Telekom's (DTEGn.DE) T-Mobile division.
Chief Executive William Smith said the purchase price for
the deal was fair given all the synergies.
Dede said there is an IMS (IP Multimedia Subsystem)
application that PCTEL has which is actually very powerful and
this would benefit the company as more networks migrate to IP.
"So, there's customer breadth and there's technology
breadth and then there is operating synergies," Dede said.
IMS is about services and applications, enabling telecoms,
mobile operators, and other service providers to offer rich
multimedia services across networks.
"We think it's the right time to enter the IMS space. We
see it as a area of growth in the latter part of 2008 and most
definitely in 2009, and we are excited in entering that space,"
CEO Smith said.
Shares of Smith Micro rose about 13 percent to $8.70 in
after-market trade, while PCTEL's shares were trading flat at
$7.61. Both trade on the Nasdaq.
(Editing by Bernard Orr)