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As consolidation gains momentum in the enterprise communications industry, Logitech, the web camera PC peripherals company, and operator of PC video service SightSpeed, announced that they've acquired LifeSize Communications for $405 million, a 5x payout for investors. Here's the company's fact sheet on the announcement, which shows that Logitech is a publicly traded Swiss-HQ'd company with over $2 billion sales and 8,000 employees around the world. LifeSize has never before reported their financials, which are estimated at $90 million for 2009 and projecting some 40-60% growth in 2010 with their revamped product line (see Passport).

LifeSize management will continue to operate the firm as a separate division (for the time being in order to achieve revenue and earnings goals while employee payouts vest over a period of time) in Austin TX.

Strategic Fit [5/5] - Complementary Product & Channels.

The recent releases of PC-based HD video cameras by TANDBERG, the release of the LifeSize Passport and the movement towards unified communications blending desktop softphones, instant messaging and video services are highlighting that visual communications is one of the few, strong growth markets in our otherwise down economy. Logitech's undisputed leadership in web cams, which are sold retail and online are a natural fit for the next step in LifeSize's technology roadmap - a consumer-oriented HD appliance. The challenge for LifeSize's business managers is that they don't have the channel or the stomach for retail, but Logitech certainly does.

Although these two firms have complementary products and channels, it is important to note that this will not result in a short term gain. LifeSize's Audio-Video specialist reseller channel may be interested in reselling Logitech web cams as part of a broader solution, but they will be hard-pressed to beat amazon.com or Best Buy on price or support. The customers of these channels will not typically be buying web cams in bulk where reseller channels might have an edge in a deal over the price of individual units.

Likewise, LifeSize products are not likely to be sold through retail anytime soon. Craig Molloy and his team have worked hard to build up a global channel network and aren't likely to blow it up anytime soon.

The fact the companies expect the deal to close this quarter shows their confidence that there are no anti-trust concerns to speak of.

Timing [5/5] - Recessions are Better Time to Buy.

Recessions are extraordinary times for the strong to get stronger.

Customer Demand [1/5].

There will be next to no impact on customers of LifeSize or customers of Logitech. LifeSize cut deep into their expenses in the past year and are well positioned, and strongly financed as a result of this transaction. It is my expectation that there will be no brand changes either, since these two brands, Logitech and LifeSize speak differently to their markets. Logitech is a peripherals company while LifeSize is an HD video company.

This deal does not help sell more HD video or sell more peripherals.

Potential [4/5].

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