Extreme Networks keeps devices connected from data centers to schools and stadiums. The company designs and markets Ethernet switches to address the networking needs of enterprises, cloud data centers, mobile operators, and service providers. Its switches are marketed primarily under the BlackDiamond and Summit brands. The company also offers RidgeLine software for central configuration, among other functions, the ExtremeXOS operating system, and IdentiFi, a family of wireless access points. It serves some 12,000 customers - including businesses, schools, and hospitals -- across 50 countries. The company acquired Enterasys Networks, which added technologies, customers, and revenue.
Extreme Networks develops its products at facilities at its headquarters in California and in North Carolina, New Hampshire, Canada and India. Manufacturing is done by outside companies including Alpha Networks, Benchmark Electronics, Flextronics, Senao Electronics, and Symbol Technologies, Inc., a subsidiary of Motorola Solutions.
Sales to customers outside the US represent about 70% of Extreme Networks' total revenue. The EMEA and Asia-Pacific regions account for nearly 39% and more than 11%.
Sales and Marketing
Extreme Networks get nearly 80% of revenue from products and the rest from service. . Extreme sells through distributors, resellers, and OEMs; its largest customers include Westcon Group and Tech Data, both 11% of sales. About 43% of the company’s sales was through its distributor channel. The company operates in a crowded networking sector where it faces competition from Brocade, Cisco, Hewlett-Packard, Dell, Juniper Networks, and Huawei Technologies.
With the acquisition of Enterasys, Extreme’s revenue leaped about 74% in 2014 (ended June). Revenye reach $519 million compared to about $300 million in 2013. Enterasys accounted for the bulk of Extreme’s sales increase.
The expense of the acquisition and for integrating the two companies was about $26 million in 2014. That helped turn Extreme’s $9.6 million profit in 2013 to a $57 million loss in 2014. Cash flow from operations dropped to a negative $27 million in 2014 from $32 million in 2013 as Extreme Networks used $126 million for the acquisition of Enterasys, and had capital expenditures of about $22 million, and purchased investments of $9 million.
Mergers and Acquisitions
Extreme Networks’ strategy in 2014 was all about the acquisition of Enterasys for $180 million. Enterasys, operating as a wholly owned subsidiary of Extreme Networks, brought a portfolio of WiFi networking technologies that supplement and expand the offerings of Extreme Networks. With the Enterasys-developed IdentiFi technology, Extreme Networks had added capability to keep multiple kinds of devices such as smart phones, tablets, wearables, and laptop computers connected to a network. It has quickly moved to provide WiFi capabilities for crowded spaces such as hospitals, hotels, and sports arenas. Extreme Networks has signed to provide WiFi hardware and software to several stadiums of teams in the National Football League as well as college football stadiums and basketball arenas. Extreme Networks plans to integrate its products with those from Extreme into a common platform.