Metaswitch finalizes reorg on top of strong ’09 results

On the heels of announcing solid results for its fiscal year, Metaswitch Networks today unveiled its new corporate structure and some changes in leadership at the top of the company.

As forecast last April by Metaswitch CEO John Lazar, the company has now integrated its Carrier Systems and Network Protocol Divisions under the Metaswitch brand name, eliminating the Data Connection Ltd. brand that had been associated with the Network Protocol Division. Going forward, the Network Protocol Division will become “an innovation and technology lab within Metaswitch,” said Andrew Randall, who is moving up from heading the marketing for the Carrier Systems division to a corporate role as senior vice president for marketing and business development.

Taking Randall’s former post as vice president of marketing in Carrier Systems is VoIP industry veteran Steve Gleave, and he will be joined in that division by newly appointed vice president of strategic alliances Stefan Knight.

The changes come at a time when Metaswitch is finding new success among larger incumbent network operators and is broadening its reach from its initial success as a softswitch vendor to a provider of service delivery platforms and new application possibilities.

“The emphasis for us absolutely is on fundamentally enabling our customers to be successful,” Randall said. “The growth of mobile broadband, the migration toward IMS, the competition over who owns the subscriber, who is delivering applications and services – all of this has carriers scared stiff of becoming irrelevant to the subscriber. Everything points to differentiated applications, but it’s not just about delivering cool apps, it’s also about developing the toolkit, the infrastructure, the APIs that enable carriers to easily offer differentiated services. One of the biggest deals we closed recently was with a US tier-one operator – wireless and wireline – and it’s all around this area of developing mobile applications and frameworks, these new capabilities that are going to allow that customer to put their brand front and center.”

For the fiscal year 2009, Metaswitch saw revenues grow 4.2% to $113.7 million, with operating margins above 20%, and much of that growth was driven by larger operators. Metaswitch now counts eight of the top 10 North American incumbents in its customer base.

“We are pretty proud of what we achieved, especially in the context of carrier VoIP market contraction by 30%,” Randall said. “Every vendor has been slashing headcount – in some cases by many double-digit percentages – and we grew by 8%. They have been cutting back on R&D, we maintained at more than 30% of revenue. Another aspect is how we got that revenue. It used to be from a lot of smaller projects. We still have a broad customer base but the shift is toward multi-million multi-year deals. We’ve signed quite a few in excess of $5 million.”

The Network Products Division will continue to be a protocol development partner for equipment manufacturers, Randall said, but will benefit from coming under the Metaswitch marketing umbrella.

“We have managed to do a good job of getting visibility and recognition for Metaswitch and in this process, we are transferring that brand equity to the Network Products side,” Randall said. “When we looked at the branding, one of the interesting things was that, on the Carrier Systems side, customers are telling us they get exceptional quality engineering from us, we have a very reliable company, people, products – and fantastic support. That is what the Network Products Division is about as well. There is common DNA there.”