Proxim, a pioneer in wireless LANs, has become the latest acquisition by a company that plans to become the 'GE of wireless' - a diversified global conglomerate with an array of wireless products.
The buyer of Proxim's assets is Moseley Associates, a quiet, lean, privately held company. Far from being a household name, Moseley nevertheless has everything that Proxim lacks: growth, profitability, and most of all, a business strategy that's working.
The company says it had fiscal 2004 revenue of more than US$90 million, and $20 million in earnings before interest, taxes, depreciation and amortisation (EBITDA). EBITDA is taken as a rough measure of profitability, but it ignores such expenses as debt payments and capital expenditures. Proxim's revenue should boost Moseley to close to $200 million.
Proxim last month declared bankruptcy and agreed to sell its assets to Moseley for $21 million.
Moseley's plan to diversity
Moseley's strategy is the brainchild of its president and CEO, Jamal Hamdani, who led a management buyout in 1996. From the outset, his plan was to transform Moseley into a diversified wireless company from its origins as a supplier of digital wireless links for broadcasters.
"We don't believe it's good to be a one-trick pony," Hamdani says. "Think of [us] as a car with many cylinders: If we can get even just a few of them firing, we're in good shape."
Before buying Proxim, Moseley acquired three other companies, which are run as wholly owned subsidiaries:
- Microwave Data, bought in 2000, offers a range of fixed and mobile wireless products for industrial applications.
- Axxcelera Broadband, bought in 2001, has a line of broadband wireless data networking products. It will bring out a WiMax 802.16 product later this year.
- CarrierComm, snapped up in 2002, offers point-to-point wireless voice and data transmission products for the carrier market.
To this portfolio, Proxim will add corporate and hot spot WLAN products, and its Tsunami point-to-point and point-to-multipoint broadband offerings, widely used by cellular carriers to connect base stations with wired networks, and with a WiMax upgrade path.
Proxim's problemsHamdani declines to use the word 'unsuccessful' to describe Proxim's efforts, following a merger with Western Digital in 2002, to offer a range of fixed broadband and WLAN equipment.
"Being a public company creates numerous pressures," he says. "It's difficult to move quickly in such a fishbowl. [As a public company] you have to present a particular view to the world, and spend time making sure that comes true."
But Proxim, which also acquired the Orinoco WLAN product line from Agere Systems, also was unable to execute a successful enterprise WLAN strategy.
Its presence in that segment steadily decreased, and Proxim consistently lost market share.
Hamdani says another pressure was caused by last year's court decision that levied $26 million in damages and interest judgment against Proxim in favor of archrival Symbol Technologies.
Symbol had said that Proxim owed royalties on products sold using technology patented by Symbol.
Those pressures, at least, won't exist with Proxim operating as a Moseley subsidiary, according to Hamdani. Proxim's previous rounds of layoffs have already 'right-sized' the company, which still has more than 200 employees.
Furthermore, Proxim won't have the costs of being a public company, or the large sums it had been paying out in real estate leases and the royalty payments to Symbol.
Why it will be different at Moseley
"Take out all that burden, and Proxim is a very viable company," Hamdani says.
For Proxim customers and partners, "it will be business as usual," Hamdani says. He pledges full support for the various product lines.
An unburdened Proxim will find new purpose within Moseley's corporate culture, and new power in being able to execute its business plan, Hamdani says.
He cites "three pillars" that support Moseley: innovative management of technology, a deep understanding of customer needs and, "in my opinion the most important," compassion.
It all sounds rather like a New Age Harvard Business Review story, but Hamdani speaks with quiet conviction.
Innovative management of technology means having smart people who can understand a rapidly changing technical environment, and keep pace with it.
To be successful, this understanding has to be wedded to an equally thorough understanding of what customers need.
But after all of this, he says, "if there's a certain harshness in you, if there's no caring, you won't get anywhere." Managers have to understand what is important to employees, customers and business partners, he says.