New ownership's new challenges

The pending acquisition of Telcordia by private investment firms Providence Equity Partners and Warburg Pincus, which the company confirmed this morning, marks a potentially significant step in a long transformation of the former R&D arm of the Bell System. It's also likely to be the true test of whether Telcordia's efforts to revamp itself are truly paying off in the eyes of its global carrier customer targets, its existing and potential partners, and even its employee ranks.

To be blunt, Telcordia now officially has nowhere to hide. Even though the once intensely private company has become more open over the past two years, at least in terms of its communications with the industry public and the financial world, it also has had SAIC's ownership to point to in defense of any perceived flaws in its strategy--whether that was criticism that the company wasn't investing correctly, that its platforms weren't open enough, that it had not truly addressed its legacy cultural issues, or that it was not expanding quickly enough into non-traditional areas. Indeed, Telcordia acknowledged today that the decision to find new ownership was come to jointly with SAIC and attributable in large part to its parent company's limited understanding of and presence in the public carrier marketplace. To continue to grow, Telcordia said, it needed owners that knew telecom carriers and knew where and how to position the company for the long term.

Now that it has that, in the form of two owners that manage a wide range of other telecom--and even other software developer--investments, the onus is completely on Telcordia to prove out its strategy and fulfill its promises for continued expansion and improvement in products, acquisition strategy, global presence and corporate culture.

Telcordia CEO Matt Desch said in a conference call this morning that the experience of seeking the right kind of new ownership offered the opportunity for him and other Telcordia managers to expand and improve their relationships and to educate the industry about Telcordia's strengths, needs and plans. That also means that all eyes in the industry--carriers, competitors and critics alike--are now focused on Telcordia, watching for results.

E-mail me at jmeyers@primediabusiness.com.