from the November 2007 issue

AT&T buys Israeli web-conferencing company Interwise

After 13 years and $98 million investment, Interwise is being sold to the US giant for $121 million.

Telecommunications giant AT&T Inc. (NYSE: T), through one of its subsidiaries, is buying IP network conferencing solutions company Interwise of Israel for $121 million. The acquisition, which is due to be completed by the end of the year, brings AT&T into the Israeli market for the first time. Interwise will continue to operate, as AT&T's local development center within AT&T Global Business Services, which serves the largest enterprises around the world and is led by Group President Ronald E. Spears.

AT&T says it expects to retain Interwise's management team and its 140-strong staff as its R&D center in Israel.

"The addition of Interwise's technology and expertise in conferencing to AT&T's global reach, networking and conferencing capabilities will broaden and enhance the range of solutions for our enterprise customers who are making the transition to IP networking," said Spears.

Video-conferencing has become a hot market in recent years, as witness the valuations of companies in this field and the attention it attracts. Interwise worked with WebEx, which was bought by Cisco for $3.2 billion in May, and with Microsoft and other giant companies.

Interwise has been around for a while. The company was founded by Hillel Kobrinsky and Zvi Frank, now joint CEOs, in 1994, to develop web-based video conferencing. The first product was an e-learning application. After the technology bubble burst in 2001, Interwise was left almost without any use for this product, and so it developed a more generic solution for web conferencing. The company's media server enables enterprises to arrange voice, video, or web conferences over their IP networks.

The relationship with AT&T began four months ago, and the acquisition went through swiftly. From the point of view of the venture capital invested in it, Interwise has not provided a large return. According to IVC, the company raised $98 million. Among its investors are Accenture (which meanwhile has sold it shares), NTT, Shrem-Fudim-Kelner, UBS, First International, GE Capital, and others.

Interwise is estimated to have had sales of some $30 million in 2006 and to be on the verge of profitability.

AT&T is considered the world's largest telecommunications services company, with revenue of $65 billion in 2006 and a current market cap of $250 billion.

Reprinted from the Israel High-Tech & Investment Report November 2007

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