Among the shares I hold in my portfolio tracked by "Globes" is Radvision Ltd. (Nasdaq: RVSN; TASE: RVSN), which last week showed signs of life after its "death blow" of October 1st, when Cisco, which represents 40% of Radvision's sales, announced its intention to buy Norway's Tandberg, the leader in enterprise video conferencing systems.
On Thursday, Radvision's share nearly hit $7, a 25% rise from its $5.60 low, reached in the past two weeks. Two possible reasons I see for the jump are the continuing difficulties in the Cisco-Tandberg deal, and several Cisco announcements that involve Radvision technology.
Tandberg shareholders have not run to accept Cisco's offer price of 153.30 kroner. It has been hard to forecast Cisco's response to a refusal, since as far as I remember, Cisco executives never encountered shareholder opposition to a price agreed upon with a company's board, and they have done tens, if not hundreds, of deals.
Cisco did not anticipate the opposition, and apparently that is why it aimed for this week as the time to announce a whole set of new launches in the communications sector, from email, through social networks at companies, to more advanced video systems. Cisco hoped to see Tandberg as part of the puzzle that the launches complete, as these products strengthen its standing as a wall to wall provider of all a company's communications needs.
Essentially, Cisco also indirectly announced the deepening of its competition against giants Microsoft, IBM, and HP a continuation of its entrance earlier this year into the server and storage sector, putting it into head to head competition with IBM and HP.
The ideal scenario for Radvison is for Cisco to drop its Tandberg bid, which would lead to stronger ties between Radvision and Cisco, and possibly even a Radvision acquisition by Cisco. That's because for Cisco CEO John Chambers, video has become an obsession. For example, last week, after a post-results interview on Fox, Chambers kidded his interviewer about a recent football game. Chambers pulled out a Flip compact video camera, made by a firm that Cisco bought, and recommended that the interviewer buy one, film the next game, and send by a built-in UBS connection, with no cable to connect, to a computer, and from there to his friends through the Internet.
More than a few of Cisco's recent announcements are based on Radvision developments. For example, when Cisco says that its expensive TelePresence systems can communicate with the lower end systems of Tandberg or Polycom which are found in nearly every meeting room in organizations, it's because of components which Radvision developed for it. When Cisco announces video communications between its WebEx systems and TelePresence, it is also because Radvision put in the components in Cisco's WebEx systems, which until recently were based on data and voice without video.
If the Cisco-Tandberg deal does eventually go through (Cisco extended the deadline for the offer to November 18th), Radvision faces two scenarios. The first, more likely one, is a gradual separation from Cisco, and a closer relationship with one of the other giants in the sector, such as HP, and/or a deepening collaboration with Samsung. In the current quarter, Samsung began to sell a tabletop video system for enterprise employees, based on a Samsung 24-inch monitor and Radvision video communications components.
The second possible scenario, though less likely, is that Cisco won't give up its current strong connections with Radvision, and will find a way to continue to buy the Radvision equipment for its high-end systems and for WebEx systems that Tandberg is nearly not in at all.
Published by Globes [online], Israel business news - www.globes-online.com - on November 10, 2009
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