PLAN A : TA K E YO U R
company to an IPO and generate
better liquidity. With the bears
showing no sign of letting the
bourses go, plan A is quite often
found on the shelf these days. Plan B :
become attractive enough to be acquired.
Many a time, the desire and frenzy to
achieve plan A have so clouded business
visions that plan B has nearly disappeared.

But not for Prem Uppaluru.The CEO
of Telera, a voice applications developer in
Campbell, California, recently effected an
acquisition of his company by Alcatel's
wholly-owned subsidiary Genesis.Telecom
isn't exactly humming these days. Giants
have fallen and the others are tottering.
How did Uppaluru manage this deal?

“Two year ago, I saw the clouds
gathering on the capital markets. We
were keen on going IPO but this change
in the market was an ominous signal. But
we were not actively seeking acquisition
either,” confides Uppaluru. Telera started
off as an ASP, where the business model
wrapped a service component around a
technology product, and the revenues
became a dependent component of
subscription. “This model was so common
in almost all startups.We saw the pitfalls
and changed our strategy to isolate the
service component from the technology.
Also, our radically different product
required that we had to establish systems
in place to make the product work endto-
end as a network solution. In this, we
also realized that the service component
that would make our technology
component work truly belonged to a
service carrier,” says Uppaluru.

Telera approached Qwest as a possible
client, who could use its technology on its
carrier systems. Qwest saw Telera's
products adding value and creating
immediate application to its existing
system and agreed to become the client.
Telera quickly moved away from a
service platform towards becoming a
full technology company. “We got back
into the software mode and focused on
developing products and technologies,”
says Uppaluru. And from this progress,
Plan B came into fruition. “As we saw
the markets being hammered, we saw
opportunity in becoming a technology
company where, in the event of an
acquisition, we could develop products
for the company while still retaining
our independence. The acquiring
company would want us for the
technology which they could carry on
their service network.”

Their second client, Call Interactive
in Omaha, was also seeking Telera
technologies. And in Uppaluru's words,
Telera was “always in close ties with
network carriers and solution companies
like Cisco, SpeechWorks, Intel and
others.” Into the picture came Genesis, a
wholly-owned subsidiary of Alcatel, who
was involved in call center integration.
Genesis was bought over by Alcatel, to
help its service extension. Uppaluru felt
Alcatel to be a very good match, with its
wide spread market share in Europe, the
Middle East and the Asia-Pacific. “While
players like Nokia and Motorola were
investing in data convergence over
wireless applications, Alcatel was, and
still is into voice and data convergence.
They are a strong player in the wire-line
environment and our products are tailored
to their needs,” reasons Uppaluru.

Alcatel's focus on voice and data
convergence at the network level also helps
create borderless enterprise functionality
at the network or enterprise levels. This
was a critical element in Alcatel's
acquisition of Telera. In the same scenario,
Genesis was working in the contact centers
for the borderless markets. All these
progressions made it logical for Alcatel to
look at Telera's offer very favorably.Alcatel
is also a leading player in the business
communications markets-with their
EPABX and telecommunication products.
Telera will be developing innovative
additions to Alcatel product segmentspersonal
attendants, unified messaging
systems and so on.

“The belief that wireless data will
lead the wireless market has been
proven wrong.Wireless voice is still at the
forefront and this will lead to data
convergence.The need for voice applications
overwhelms the development of data
applications. This is perhaps the most
decisive factor in Alcatel's decision to acquire
Telera under Genesis,” says Uppaluru.
Indeed, because Uppaluru's company—
with a capital base of $90 million—has
been acquired for $135 million. And
Uppaluru will still be at the helm of
affairs on Telera's technology drive.

While Telera will merge with
Genesis to develop products for its voice
products, it retains its independence to
develop other products for Alcatel. In
this, Uppaluru and Telera CTO Mukesh
Sundaram will be instrumental in
leading the challenge.

Uppaluru must be a happy man.
Smart decisions early on in the business
model helped him to deliver value to his
investors with this acquisition. Plan B
worked and worked very well.