On a conference call with analysts today, Tom Hudson, chairman, president, and CEO of CNT, said that "Inrange is extremely complementary to CNT." The deal will expand the combined companies' customers to 4,000, with Inrange providing a strong European base, he said. In addition, Inrange brings CNT a sizeable services business, with break/fix maintenance contracts worth $100 million and consulting services revenues of $60 million annually.
"Overnight, this makes CNT one of the world's largest providers of storage networking products and solutions," Hudson said. CNT says it expects the acquisition to be accretive to earnings per share by at least 10 percent in 2003.
To its existing portfolio of SAN extension products and services, CNT will be able to offer Inrange's high-end Fibre Channel directors. The Inrange FC/9000 provides up to 256 ports in a single switch and also supports Escon and Ficon mainframe storage networking protocols. "This looks like a way of both companies being able to diversify their revenue base," says Harry Blount, senior storage research analyst at Lehman Brothers.
CNT has around 700 employees and Inrange has 760. Greg Barnum, CNT's CFO, says the company is "already working on an integration plan... including eliminating duplicate costs," indicating that layoffs are in the offing. CNT expects to see annual savings of between $10 million $15 million, starting in early 2004. Both Inrange and CNT have cut their headcounts in the past year (see CNT Lays Off 10% of Workforce, CNT Can't Smooth It Out, and Inrange Lays Off 70).
However, analysts wonder how well CNT will be able to compete against the two stronger incumbents in the SAN switching space -- Brocade and McData -- and at the same time cope with Cisco's entry into the market. Cisco, in particular, is looking to achieve synergy between its dominance in wide-area IP networks and the rollout of its MDS 9500 Fibre Channel directors (see Cisco Ups SAN-Over-Optical Ante and Sprint Puts Cisco to Test).
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