Calence, Avnet Enterprise combine

Two enterprise networking providers--Calence and Avnet Enterprise Solutions--are combining to form what its executives believe will be one of the largest companies in the U.S. focused solely on building and managing enterprise data and communications networks.

The new organization, Calence LLC, is not a subsidiary of either company but a partnership co-owned by Avnet Inc. (a global distributor of business information technology) and Calence Partners. The company won’t disclose how much of the partnership will be owned by each parent.

Calence LLC will offer networking consulting services pertaining to IP communications, infotech security and network infrastructure and will help provision, integrate and manage networks and outsource business units such as call centers.

“We work with service providers in the provisioning of the networks our customers use,” said Michael Fong, Calence’s chief executive and Calence LLC’s new CEO. “But to the extent that carriers try to provide network integration services, we would compete with them--everything from professional services to design engineering.”

Combined, the two companies expect to realize about $300 million in revenue from 2005, nearly two-thirds of which will come from AES. Calence LLC will be headquartered in Tempe, Ariz., and employ about 400 people.

Separately, Calence and AES both served the networking needs of large enterprises--relying heavily on equipment from Cisco Systems--but in different markets. They both served New York City, but while AES served about 15 major markets such as Chicago, Denver and Seattle, Calence served six or seven including Kansas City, St. Louis, Phoenix and Portland.

“The only real overlap was that functionally we did the same types of things in maybe 60% of our business,” Fong said. “But we didn’t do it for any of the same customers or in any of the same geographies, which is one of the reasons this combination is so strong.”

In addition, AES brings to the union a focus on optical networks and a base of education customers that Calence didn’t have. Calence, meanwhile, brings a developed outsourcing business unit and a particular expertise in the area of call centers.

Perhaps the first major customer for the new organization is its own parent, Avnet, which will outsource all of its own voice, data and telecom needs to Calence LLC in a five-year contract whose value neither party will disclose. Avnet, a Fortune 200 firm with more than 10,000 employees, has operations in 68 countries.