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ShoreTel buys M5 to bring hosted comms model to channel

Alex Scroxton

Unified communications specialist ShoreTel has splurged $146.3m in cash and stock on privately held cloud communications vendor M5 Networks in a bid to beef up its cloud practice and get in front of resellers that are looking to deploy hosted IP comms in their customer base.

The acquisition includes M5's customer base, distribution capability and proprietary network, and after close will be operated as a new ShoreTel business unit led by current CEO Dan Hoffman.

ShoreTel said that its current Champion partner programme would undergo a new evolution in coming months to enable partners to incorporate unified comms as a service into their offering.

ShoreTel CEO Peter Blackmore said: "M5 does have a channel referral model today. We will enable our channel to have that [and as] some of our channels have even adopted one or two other competitive hosted solutions ... I'd hope they would then move to the ShoreTel solution."

A low churn rate, high ARPU and co-location datacentre management expertise had proved particularly attractive to the acquirers, the boss explained.

"This acquisition provides a recurring revenue stream that makes our revenues inherently more predictable," he told analysts on a conference call.

"With the addition of their business the combined company is expected to have recurring revenues of over 30%, significantly improving our visibility and adding more predictability to our quarterly revenue," he said.

ShoreTel announced the acquisition at the same time as it posted its second quarter numbers, revealing its now customary GAAP net loss after expenses, amortisation and this time, a litigation settlement.

On global sales of $58m (£36.62m), the firm booked a GAAP net loss of $2.5m, a million dollar improvement on the figure this time last year. The non-GAAP figure came in at $1.4m, reversing a loss of $1m in Q2'11.

Despite not having actually made a profit in well over two years, ShoreTel remains bullish, with well over $110m in cash, and is targeting deals of an increasingly large nature, as EMEA boss Adrian Hipkiss recently revealed.

Conference call transcript courtesy: SeekingAlpha


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