Bloomberg
AudioCodes to Buy Netrake for $10 Mln to Add Products
2006-07-06 15:49 (New York)
By Gwen Ackerman

July 6 (Bloomberg) -- AudioCodes Ltd., an Israeli maker of Internet phone call technology, agreed to buy Netrake Corp. for $10 million in cash, adding new products to its offering to telecommunications companies. AudioCodes will pay another $1 million if Plano, Texas-based Netrake meets certain financial targets by the deal's close, which is expected in the third quarter, the Yehud, Israel-based company said in a PRNewswire statement today. The company announced its latest acquisition the same day it said it completed an $85 million purchase of Nuera Communications Inc., announced in May. AudioCodes returned to profit in the second quarter of last year after two years of losses as the company increased sales through alliances. ``Both acquisitions make excellent strategic sense for us,'' Chief Executive Officer Shabtai Adlersberg said in a phone conference with analysts today. ``Neura strengthens our position with cable providers and opens for us markets to sell to their customer base. Netrake opens for us a fast, growing and important niche market.'' Netrake's session border controllers and security gateway technology are used to for real-time transmission of voice and multimedia between disparate voice-over-Internet-protocol networks. Shares of AudioCodes rose as much as 43 cents, or 3.9 percent, to $11.33 in New York and traded at $11.19 at 3:37 p.m. local time. They closed in Tel Aviv up 0.64 shekel, or 1.3 percent, to 48.99 shekel. Compensation The acquisition will cut AudioCodes's annual profit by 7 cents a share this year and in 2007, excluding the cost of stockbased compensation and the amortization of non-tangibles connected with the acquisition, Nachum Falek, AudioCodes's chief financial officer, said at a conference call. Nine analysts surveyed by Thomson Financial had forecast that AudioCodes's earnings would reach 46 cents a share this year before the Netrake acquisition was announced.

Netrake's sales will probably grow 20 percent this year from $5 million in 2005, and may grow another 50 percent in 2007, Falek said. He said Netrake will probably break even by the end of 2007, not counting stock compensation costs and amortization of intangibles.