Bloomberg cites a report in the Financial Times (FT.com subscription may be required) asserting that private equity firm Permira is poised finally to take Genesys Labs off of Alcatel-Lucent’s books. This market sees this as good news because it has been told by ALU’s management that it marks a return to a network operator focus and that the spin off of non-core operations is key to the company’s return to profitability.

As a long-time follower of Genesys Labs, I regard it as good news both for employees of Genesys and their enterprise customers as a period of uncertainty approaches its end. Alcatel bought Genesys back in 1999, for the same $1.5 billion (not adjusted for inflation). Permira is a private equity firm, founded in London in 1985. It has built a portfolio of companies in a diverse set of businesses, including in chemicals, consumers, industrial products and services, technology, media, and telecommunications. It has a decidedly European focus and its average deal size is in the $650 million range, making the acquisition of Genesys (if it is at the $1.5 billion price) more than twice the size of its average purchase.

Based on reports, it looks like Permira succeeded in convincing ALU to keep the enterprise networking and equipment part of its Enterprise Division, meaning that the object of its purchase purely Genesys Labs. This makes sense because Genesys’ strength in the marketplace has been based on its software’s ability to support customer care operations in through its core contact center and customer interaction software and its interactive voice response systems (Genesys Voice Platform or GVP). Its innovative work in this area was never bolstered by the inclusion of enterprise wide area networks or wireless LAN technologies. Ironically, it would have benefitted more from tighter links with “core” ALU technology in public network infrastructure as key components of customer interaction moved into “The Cloud.”

The transaction, when completed, marks the end of uncertainty for Genesys and its customers. It brings much needed cash into ALU’s coffers so it can pursue its “high leverage network” approach to inspiring network operators to get more innovative. More importantly, we got the sense that enterprise customers were hesitating to commit to some of Genesys’ most forward-looking solutions to support, multi-channel, social and mobile engagements.

Genesys should be one of the top contenders for enterprise software and infrastructure to support conversational commerce and, for 9 of the 11+ years under Alcatel (then Alcatel-Lucent) it was able to stay at arm’s length from the parent company. Then, about two years ago, it was ceremoniously glommed into the Enterprise Software Division and its crown jewels were inlaid into a substratum of enterprise telecom gear. It wasn’t pretty (any longer).

Permira has successfully separated the wheat from the chaff here and has the grist that can be the basis for a tasty brew for social, mobile customer care. The question now is whether it is too late.

Categories: Articles

Tags: Genesys, Alcatel-Lucent, Contact Center, Mergers and Acquisitions, conversational commerce