Buying SD’s Ortiva Wireless Adds Video Optimization to Allot’s Tools

5/2/12Follow @bvbigelow

Israel’s Allot Communications (NASDAQ: ALLT), which optimizes data traffic and performance for both fixed and mobile broadband networks, says it is acquiring San Diego-based Ortiva Wireless, which specializes in optimizing video streaming across wireless networks. Financial terms of the deal were not disclosed.

Ortiva CEO Marc Zionts, who was working to finalize the deal this afternoon, referred questions about the acquisition to officials at Allot, which is based near Tel Aviv, in Hod Hasharon, Israel. In response to a question about Ortiva’s local operations, Zionts says the company plans to keep its office in University City post-acquisition, and will likely grow beyond its current 41 employees.

The acquisition is expected to close in the second quarter.

“The teams are very similar,” Zionts says. “We both have lots of talented people who are passionate about what they do and are excited about working with customers.” He notes that Allot CEO Rami Hadar was a co-founder of San Diego’s Ensemble Communications, where he worked for many years with Allot CTO Jay Klein. Ensemble specialized in broadband wireless access equipment.

In fact, Zionts says he also sees lots of similarities between Tel Aviv and San Diego. Both cities are both set against a sea and enjoy a Mediterranean climate. The local economies also are similar, Zionts says. Both depend largely on the military, tourism, Information Technology, and life sciences industries.

In a statement released May 1, Allot says integrating Ortiva’s technology with Allot’s service gateway will add video optimization to traffic steering, media caching, and other tools that Allot already uses to enable mobile operators to optimize data traffic and manage their network operations. “Our own MobileTrends Report says video now accounts for over 40 percent of global mobile Internet traffic. And it’s all ‘over-the-top,’” Allot says, meaning that operators use Allot’s advanced computer network packet filtering technology (known as Deep Packet Inspection, or DPI) to manage such traffic.

As Zionts explained last August, Ortiva improves the quality of a video streaming for a mobile user by reducing the amount of data that gets transmitted. The company has raised nearly $40 million over the past eight years from San Diego’s Mission Ventures and Avalon Ventures, along with Palo Alto, CA-based Artiman Ventures, Intel Capital, and Comcast Interactive Capital.

As a private company, Ortiva does not disclose details of its financial operations. Allot reported its financial results yesterday, posting a profit of $3.2 million, or 10 cents a share, on revenue of $24.2 million for the first quarter of 2012. Allot says its first-quarter revenue increased by 41 percent over the $17.2 million during the same period last year. Allot says the acquisition is expected to add between $3 million to $5 million in revenues in the second half of 2012, with a gross margin profile similar to Allot’s current level.

In Allot’s statement, CEO Hadar says, “Since the introduction of Allot Service Gateway in 2007, our goal has been to leverage our unique technology to enable the broadest range of cost-saving and revenue-generating services on a single intelligent network services platform. By purchasing Ortiva, we will own an innovative video optimization solution, one of the major value-adds that our customers are seeking today. As video becomes an ever-increasing challenge for mobile networks, this acquisition will allow Allot to offer a robust and tightly integrated video optimization service within Allot Service Gateway. We look forward to welcoming Ortiva’s talented team into our company.”

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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