Novatel's Feeney acquisition is just a start, expect more this year, CEO says

Novatel Wireless CEO Alex Mashinsky, who joined the company about one year ago, says that in order to succeed in the Internet of Things (IoT) space, you have to deliver a solution to a problem better than your competition.

For Novatel to succeed, it needed to acquire Feeney Wireless (FW), a small Eugene, Ore.-based company with about 91 full-time employees. And it will make more acquisitions this year--at least two more, if things go according to plan.

"The only way to become No. 1 in IoT is to have more solutions than anyone else, have more implementations than anyone else," Mashinsky said during an interview with FierceWirelessTech. "That's what it comes down to. Can you deliver a solution to a problem better than the competition?"

FW's products can be found in everything from vending machines to fleet applications. It offers its Skyus modem kit to simplify the integration of mobile connectivity in M2M solutions. The Skyus performs like an embedded module but is a self-contained add-on unit, combining a radio module within an M2M-ready adapter board specifically built for embedded applications.

Novatel, which sells the popular MiFi mobile hotspots and other IoT solutions, has been studying potential acquisition targets since Mashinsky joined the company last year. In fact, its team identified more than 120 companies and analyzed them for everything from their culture to their talent, looking for companies that would be a good match with Novatel.

FW met the criteria. Novatel is "excellent" at solving a big problem for a big customer, but what it lacked was the ability to deliver end-to-end turn-key solutions for the small and medium-sized customers that need 1,000 units of something--as opposed to millions of units. "Feeney fit perfectly, and it was a group of people we wanted to work with," he said.

"We were great at building the best products out there and saying, 'here's our box and here are the different software vendors that we integrated with,' but that's where we stopped," he said. "We could not go and deliver the turn-key solution."

FW has more than a quarter million active accounts and more than 1,000 corporate customers, so it made sense to add it to Novatel the portfolio. Plus, FW Chairman Bob Ralston, who founded the company in 1999, and his son, FW President and CEO Ethan Ralston, as well as others are sticking around, indicating their support for the combination.

Mashinsky said it does Novatel no good to acquire the company if the people aren't part of the deal--and no, he doesn't plan on any layoffs. Quite the contrary, according to Mashinsky, who has experienced acquisitions from several different vantage points through the course of his career.

Mashinsky founded Elematics, creator of a multi-vendor control plane software for optical telecom infrastructure, in 2001, and in 2004, he founded Transit Wireless, a wireless distributed antenna systems company that provided wireless data coverage to 300 of New York City's subway stations. Between 1995 and 2003, he founded and operated companies in the information technology sector, including Arbinet.  

With FW, there is no "integration" plan, because that's not the idea. "The beauty of Feeney is they are the best at what they do and we are the best at what we do. If each of us just does what we do well, we don't need to integrate. I think a lot of these acquisitions fail because people are trying to integrate and change the culture," he added.

"We don't want to mess with success," he said. "It's here, it's working. Let's just scale it up. That's our plan."

Toward that end, Novatel continues to talk with different companies, and "we definitely are looking at other potential acquisitions," he said.

Novatel completed the acquisition of FW for $25 million in a combination of cash and stock, with up to an additional $25 million in potential earn-out payments over four years based on FW's revenue and gross profit performance.

For more:
- see the press release
- see The Register Guard article
​- see this Seeking Alpha post

Related articles:
Verizon rolls out latest Novatel LTE-capable MIFi hotspot for $50
Novatel says LTE MiFi now the category leader
Novatel positioning MiFi device as apps platform

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