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Alcatel’s announced acquisition of Spacial Wireless yesterday for $250 million is significant because it’s the first major telecom acquisition in nearly three years. Silicon Valley is filled with telecom start-ups that have been treading water ever since the telecom crash in late 2000. Finally, demand for their products are beginning to pick up again, suggesting they may have a chance to see liquidity after all. Spatial is Texas-based, but some big valley venture capital firms enjoyed profits from the Spatial acquistion (VantagePoint Venture Partners and Sequoia were backers), and San Jose’s Cisco has been picking up the pace of its acquisitions (albeit smaller in nature). True, Spatial does operate in the wireless sector, which is clearly the most attractive sector. Wireless didn’t suffer from the supply glut that the fixed world did. Whether the heavy-duty next-generation router start-ups — companies like San Jose’s Caspian Networks, for example — can rise from the embers remains to be seen.
Spatial Wireless would extend Alcatel’s expertise in the U.S. mobile standard known as CDMA. The acquisition also enhances the company’s ability to compete with Cisco, Motorola and others. Spatial is Alcatel’s largest acqusition in nearly four years. More impressive still is that Spatial was founded in February 2001, meaning that it scored a solid return in just over three years. That’s swift by any standard. But in telecom, that’s saying something.
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