Alcatel acquires iMagicTV

IMagicTV, which provides middleware to telcos providing video services said it would be acquired by Alcatel for $30 million in stock or the equivalent of $1.20 per share.

Alcatel, which already owns 16% of iMagicTV and had its vice president of technology and development Timothy Hember on the board, comes in as something of a savior for the St. John, New Brunswick-based company. While the company has been able to win some marquee name customers -- notably Telus and SaskTel in Canada and CenturyTel in the U.S. -— having Alcatel’s name recognition should go a long way in getting its foot in the door of RBOCs, who have turned a deaf ear toward video.

The timing also helps. In October of last year, the company formed a special committee and hired CIBC to explore strategy alternatives (read: sell off the company or shut it down).

Since then, the company has gone into cash conservation mode. In its fiscal third quarter 2003 report, iMagicTV had revenues of $334,000 and a net loss of $4.6 million. Perhaps more importantly, the company had cash of just over $36.5 million.

In iMagicTV, Alcatel picks up a company that can bolster its “triple-play” pitch by bringing video as part of its packaged DSLAM or next-gen DLC.

“It’s key in terms of their products and their knowledge,” said Peter Merriman, director of business development for Alcatel’s broadband entertainment group.

Left up in the air is the fate of iMagicTV’s Broadband Alliance, which includes several Alcatel competitors such as AFC and Lucent Technologies.

“We were considered their preferred partner in most cases,” said Merriman, noting that Alcatel will continue working with some alliance members that don’t compete.