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Issue Date: April 15, 2006 issue, Posted On: 4/20/2006

Keynote acquires Sigos for $30m

Indus News Wire

SAN MATEO, Calif. — Keynote Systems has acquired Sigos, a supplier of mobile data network testing and monitoring system to European wireless operators for $30 million.

Keynote may pay as much as an additional $9.6 million, depending on revenue and profit numbers in 2006.

The San Mateo-based Keynote provides services that improve online business performance and communications technologies. Umang Gupta is chairman and chief executive officer of Keynote.

Sigos, which is based in Nuremberg, Germany, has about 55 large customers including Vodafone, T-Mobile, Telephonica and Orange. The company was founded in 1989 and employs 65 people, all of whom are joining Keynote.

By acquiring Sigos, Keynote is moving to aggressively grow its overall business in Europe and across the world by expanding into the fast growing mobile market with leading technology solutions for testing, monitoring and improving wireless networks and applications, the company said.

Keynote will operate Sigos as a wholly owned subsidiary and rename the company Keynote Sigos.

Sigos has been profitable for the last three years and expects to continue its profitability. Based on preliminary estimates the acquisition will add $10 million of revenue to Keynote's operating results in fiscal 2007.

Johannes Reis, chief executive officer of Sigos, will continue in his position as CEO of the subsidiary and report to Keynote's head Gupta.

The remainder of Sigos' executive management is expected to remain in place.

"Keynote up to now had a fledging business in the mobile service level management space largely focused on wireless data services benchmarking and competitive trending with key customers such as Cingular, Sprint, Verizon and MSN," said Gupta. "With the acquisition of Sigos, Keynote is now positioned to take on a more central role in the mobile market by providing heavy-duty network testing, active service monitoring and alerting systems to mobile network operators and content providers."

"Sigos has a strong customer base with well-respected technology that we expect to aggressively leverage in the rest of the world, including the United States," he added. "Over the past year as we became more familiar with each other, Keynote and Sigos realized that we not only have very complementary technologies, but an excellent cultural fit between the two companies."

" Sigos has spent over 16 years developing its world-class technology, blue-chip customer base and brand recognition in Europe as a leader in mobile testing and active service monitoring," said Reis. "To move our business to the next level an acquirer would need name recognition, a solid financial base of a well-positioned profitable public company and complementary technology."

"As the lines between the Internet and mobility blur, our respective strengths will complement each other as Keynote is the leader in Internet service level management in the U.S., and Sigos is a leader in mobile [service level management] in Europe," he added.

As specialists in active testing of mobile networks, services and components, Sigos offers automated test equipment, software systems and highly sophisticated consulting service for end-to-end service quality management. Mobile operators need Sigos' services because they are differentiating themselves from each other on the quality of their service. Dropped voice calls, inaccurate billing and lost data connections all encourage churn and can inflict serious damage on an operator's financial results.

Sigos provides an automated, centrally administered system with physical probes distributed over the whole network for performing efficient end-to-end active monitoring and testing for a network operator or carrier. The Sigos test system is called SITE and typically includes a central service appliance and numerous remote agent appliances. The central server acts as the brains of the system where tests are created, scheduled, stored and analyzed.

Prices for a typical SITE system range from $120,000 to over $1.2 million.

Founded in 1995, Keynote helps approximately 2,300 corporate customers and 11,000 individual subscribers become "the best of the best" online. The business premise supporting Keynote's mission is: "Online businesses can't manage what they don't measure." As an independent and trusted third-party, Keynote provides IT and marketing executives with unbiased benchmarking data, competitive analysis and operational metrics from the customer perspective. This data measures service levels and customer experience of Web sites, broadband services and mobile communications.

Keynote manages a market-leading infrastructure of over 1,600 measurement computers and mobile devices in over 114 locations and 66 metropolitan areas worldwide that assess service levels. It also has a panel of over 160,000 consumers who participate in interactive Web site tests that assess user experience.

Gupta was an early investor in the Keynote in 1997 and became the CEO of the company shortly thereafter. The company went public in 1999.

Gupta was one of the first handful of employees at Oracle Corp. Gupta actually wrote the first business plan for Oracle, working alongside founder Larry Ellison. He held several of the earlier executive positions at Oracle, including vice president and general manager of the microcomputer products division.

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