British, Canadian DSP makers target U.S. military users

BURNABY, British Columbia - The promise of "making it big in America" that lures immigrants to the U.S. recently enticed two foreign digital signal processing (DSP) system providers to target U.S. customers - particularly in the military - through merger and acquisition.

Jun 1st, 1998

By John McHale

BURNABY, British Columbia - The promise of "making it big in America" that lures immigrants to the U.S. recently enticed two foreign digital signal processing (DSP) system providers to target U.S. customers - particularly in the military - through merger and acquisition.

Leaders of Loughborough Sound Images (LSI) of Loughborough, England, merged their company with Mizar Inc. of Carrolton, Texas, to form Blue Wave Systems. Executives of Spectrum Signal Processing in Burnaby, British Columbia, meanwhile, purchased Alex Computer Systems of Ithaca, N.Y.

Both consolidations also involved the purchase of the Mizar and Alex high-end, floating point military DSP business.

Mizar engineers are skilled in building rugged VME single-board DSPs, which are part of military systems such as the Raytheon Lighweight Hybrid Torpedo. Loughborough officials pushed for a merger with Mizar not only to improve their access to the U.S. market, but also to broaden their product line into rugged products, and to make important procurement contacts within the Pentagon, says Simon Yates, chief executive officer of Blue Wave. The consolidated company is to be based in Carrolton, Texas.

For LSI and Spectrum, it was not only an opportunity to get into the U.S. but more importantly an acquisition of customer base, says Julie Koelsch, DSP marketing manager at Texas Instruments in Houston. Both Mizar and Alex have a strong foothold in the high-end military market, she says.

"The DSP consolidation trend continues as the strong DSP companies acquire solid, smaller strategic players," says DSP industry analyst Will Strauss of Forward Concepts, in Tempe Arizona.

However, the trend in third party DSP providers is more towards software acquisition rather than the hardware consolidation involving LSI and Spectrum, Koelsch says. Spectrum also bought software provider 3L Limited in Edinburgh, Scotland last year.

Spectrum and Blue Wave have made it so big that each is claiming to be the world`s largest DSP system provider.

It is a close call on who is actually bigger, Strauss says. LSI, Mizar, and Spectrum all had around $20 million in revenue with Alex being much smaller, Strauss explains. Both companies have improved their business but as to who is bigger and better only time will tell, he adds.

Alex, purchased for a combination of Spectrum stock, cash, and warrants totaling more than $8 million, was a wholly owned U.S. subsidiary of Alex Informatics Inc. of Montreal.

Officials at Analog Devices in Norwood, Mass., see advantages in the Spectrum acquisition, says Len May, product marketing manager at Analog Devices. As a big Analog Devices customer, Alex`s purchase by Spectrum means more business for the SHARC DSP, May says.

"Buying the fastest growing SHARC-based company is the latest step in our growth strategy," says Barry Jinks, Spectrum`s president and chief executive officer. "This acquisition enables us to gain immediate access to Alex`s customers - some very large floating-point, radar/sonar and wireless customers"

The consolidation of Spectrum`s floating-point hardware design expertise and Alex`s broad floating-point based software and hardware portfolio will make for a high-performance, easy-to-use commercial-off-the-shelf DSP system, Jinks says.

"This combination will assure that Spectrum remains the industry`s largest player, positioning Alex`s technology and complementary products in the forefront of the DSP systems industry with its established international presence," says Andrew Talbot, president of Alex Computers.

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