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Wireless Ascent

August 5

Venture Reporter has released a study of wireless market transactions supporting the preception that demand for wireless products and services is growing strongly as is the rate of technical innovation.

M&A
Q2 2003 generated 13 closed M&A deals among wireless vendors for a total value of $145 million. Four of the larger acquisitions averaged about $36 million each. Compared to Q1, Q2ís M&A activity slightly declined in the number of deals done (13 versus 15) but significantly declined in value ($145 million versus $620 million). Regardless, these quarter-to-quarter variations are probably not statistically material.

The quarterís largest announcement, though for a deal scheduled for close in Q3, was SR Telecomís proposed purchase of Netro, valued at $121 million. Among other things, SR Telecom (TSX:SRX) provides point-to-multipoint wireless access IT services and packaged software solutions for Federal Government clients and has a market cap of about $770 million. Netro (Nasdaq: NTRO) is a vendor of broadband, point-to-multipoint, fixed wireless equipment million. In the deal, SR Telecom would pick up Netroís AirStar product line, which operates at high wireless frequencies (10 to 39 GHz) and its Angel product line which operates at 3.5 GHz for international locations.


VC Investment
In Q2, 86 investors funded 31 wireless firms, nearly doubling Q1ís participants. We regard this increase as statistically meaningful. Certain investor locations accounted for the bulk of activity: more than one-third (34) of wireless investors are based in California (with nine in Menlo Park alone), while eight are in New York, and six hailed from Texas.

Intel Capital was again one of the most active wireless VCís during Q2, with three investments. In the 12 months between April 2002 and March 2003, Intel had made 13 additional wireless investments. Among the VCís investments were Credant Technologies, vendor of wireless security software, Tropos Networks, manufacturer of systems used to build metro Wi-Fi networks, and Vivato, a provider of Wi-Fi switching technology.


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