Packeteer Makes Mentat Purchase

Packeteer Inc. (Nasdaq: PKTR) has snapped up networking specialist Mentat Inc. in a cash deal worth $16.5 million, which it hopes will open new routes to market (see Packeteer Acquires Mentat).

Mentat develops acceleration technologies specifically for satellite and high-latency network links. The Los Angeles-based firms flagship offering is the SkyX appliance, which replaces TCP-over-satellite links with XTP, a protocol built for long latency, high-loss conditions. This is designed to improve the performance of IP-based applications traveling over the links.

The networking specialist also licenses the SkyX Gateway technology in the form of a software source code for integration with satellite modems, routers, caching systems, and other satellite connectivity equipment. On a conference call earlier today, David Côté, Mentat’s ÇÉÔ, explained that the deal will also enable Packeteer to exploit new markets, namely the government and military sectors.

Currently, these markets account for only 5 percent of Packeteer’s customer base, although they make up half of Mentat's customers. Packeteer execs on the call were unwilling to divulge any information on individual government users, although they confirmed that their new acquisition has no 10 percent customers.

Although its federal clients are being kept under wraps, Mentat also boasts an impressive list of commercial customers, including IBM Corp. (NYSE: IBM), Sprint Corp. (NYSE: FON), and Sony Corp. (NYSE: SNE).But what about the Mentat staff? Packeteer is keen to get them on board: The Cupertino, Calif., firm will pay around $3.5 million in retention bonuses to the Mentat employees. Côté expects the Mentat payroll of 20 employees to stay with Packeteer.

Packeteer, which predicts the deal will add between $6 million and $7 million to its 2005 net revenue, confirms that Mentat’s Los Angeles office will remain open. The acquisition will bring Packeteer’s total number of employees to around 280.

Satellite is emerging as a hot area for vendors of devices that improve application performance. In October, for example, Packeteer’s rival, Peribit Networks Inc., announced a partnership with iDirect Technologies, a manufacturer of satellite networking equipment. The two companies agreed to "reference sell" Peribit’s SR-15 and iDirect’s iNFINITI satellite networking devices into their existing customer bases (see Peribit Touts Product, Partnership).

Finding new routes to market is seen as key at a time when a number of rival vendors are battling to win deals from bandwidth-hungry users. Startup Swan Labs Corp., for example, is hard at work building out its reseller channel (see Vendors Widen WAN Strategies).

— James Rogers, Site Editor, Next-Gen Data Center Forum0