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TESTING THE ROAD MORE TRAVELED

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One of the things that comes up consistently in conversations about Anders Gustafsson, CEO of Spirent, is how much he travels. That's certainly not atypical of people leading companies in the telecom industry, but the fact seems to be particularly significant to those close to Gustafsson. Perhaps that's because of what it says about how quickly and completely he has taken up the task of steering the company's priorities and image in new directions.

“Anders is a highly mobile individual,” said Parag Sheth, Spirent's senior vice president of corporate marketing, who joined the company in May. “He's in front of customers and employees. It helps when you have a CEO who's willing to get on an airplane.”

He certainly would have to be to serve as the corporate head of Spirent, once a veritable hodgepodge of acquisitions in the testing sector that Gustafsson is charged with organizing and focusing. He accepted that challenge just a little more than a year ago, when he left a position as senior executive vice president for global business operations at Tellabs in August 2004. And he certainly is no stranger to traveling the world to advance the causes of communications technology: He first joined Tellabs in June 2000 as vice president and general manager of that company's EMEA sales region based in the U.K., and later that year became president of global sales. From August 2002 to February 2004, he was president of Tellabs International.

Gustafsson was drawn to Spirent, he said, by the breadth of technologies the company was involved in and what he saw as a unique ability in the test sector to span everything from lab testing to network monitoring.

“Spirent has come together as the result of a lot of different acquisitions of a number of companies,” Gustafsson said. “We have a lot of different cultures and locations, and we've done a lot to pull together those groups into one Spirent.”

The London-based parent company now known as Spirent dates back to the 1930s, when it was known as Bowthorpe. In the late 1990s, Bowthorpe began to focus on high-tech markets, acquiring Netcom Systems in 1999. In 2000, the company changed its name to Spirent and acquired Hekimian and Net-Hopper, which formed the basis of its service assurance division. In 2002, Spirent also acquired Caw Networks from Anritsu.

The company Gustafsson took the helm of in 2004 did indeed boast a broad mix of manufacturing, equipment and transmission test capabilities. The Rockville, Md.-headquartered Spirent Communications (Spirent plc, which Gustafsson heads from London, has two other divisions with interests outside of telecom) had 2004 revenue of $460 million and 1700 employees in 14 countries, and the company says it has invested $400 million in research and development in the past five years.

When Gustafsson took over, Spirent was equipped to test everything from the increasingly omnipresent IP technology to next-generation wireless and the triple-play bundle, at stages that include vendor lab development, carrier trials, network implementation and beyond.

The problem was that Spirent's many acquisitions had created a collection of somewhat disparate islands — of products that all fit similar themes but didn't yet necessarily harmonize well together.

“Anders has been taking the company from a product perspective to a solutions perspective,” said Jessy Cavazos, program manager for the communications test group of Frost & Sullivan. “I think that's what its customers want to hear. The integration effort is really starting to pay off.”

Cavazos noted that in the test equipment realm, Spirent not only has a broad portfolio of those solutions in its coffer, but also a time advantage: Company combinations like Anritsu/NetTest, JDS Uniphase/Acterna and Tektronix/Inet are much more recent than Spirent's.

“All of these companies are going through major acquisitions, and Spirent has a jump because its integration is done,” she said. “Overall, the company is going in the right direction in the market, refocusing its divisions on significant growth areas in the communications industry.”

Indeed, Gustafsson has worked over the past year to focus Spirent's attention on the industry's highest-growth areas, including IP service assurance, triple-play services, and next-generation wireless and the IP multimedia subsystem, which Gustafsson said will require more testing and monitoring because of that architecture's focus on service flexibility.

“To date, service providers have managed networks,” Gustafsson said. “Going forward, they'll have to have much better ability to manage services.”

One area where Spirent is not active and has not invested is in test solutions for optical technology platforms, which Gustafsson said he sees as a somewhat serendipitous outcome of market direction.

“By great insight or some hunch — maybe a little bit of both — we decided not to invest in optical networking,” Gustafsson said. “The market has moved in our direction. With IP, you get a lot more interplay between the underlying technology and the customer service. Level of performance becomes much more important.”

At Supercomm '05 in June, Spirent introduced a test system for triple-play service bundles.

“There are so many different things to test and monitor within triple play,” Gustafsson said, noting how critical IPTV will be to traditional telecom carriers. “Video might be the stickiest of all the services. We continue to be on the forefront of innovation, and we get good input from customers as far as areas they're looking at.”

Gustafsson said that in addition to following industry trends and tracking technology developer and carrier direction to align its test development efforts to that, Spirent also is very active in standards groups to ensure that technologies can be tested and monitored properly when they're released.

“Service providers are looking to do more work in their own labs before they make commitments in the network, and they want independent solutions, Gustafsson said. “They aren't comfortable having their network equipment providers monitor their own equipment.”

In addition to focusing Spirent on areas of growth, Gustafsson also has taken steps to streamline operations, including outsourcing all manufacturing to accelerate time-to-market, Sheth said. He also has bolstered the management team, adding William Burns, former senior vice president of global marketing for Tellabs, as president of the service assurance division late last year. And in July, Spirent appointed Jan Maciejewski, a former Alcatel executive, to head its European service-assurance efforts.

Gustafsson also created the corporate marketing function, to “bring a cohesive message to the marketplace,” Sheth said, and continued to expand Spirent's global focus.

“Obviously China and India represent big opportunities for test vendors, and Spirent was one of the first to have operations in those locations,” Cavazos said.

Spirent certainly still has its challenges. Last month, the company reported a 4% drop in revenue from last year's first half and a 34% drop in operating revenue, declines that were attributed primarily to the performance of its service-assurance division and delays in spending brought on in part by consolidation.

“Consolidation of your customer base is always a threat,” Cavazos said. “There are ways to overcome it — it's a challenge, but it can be overcome by an innovative company like Spirent.”

Sheth, for one, remains confident about Spirent's opportunities under Gustafsson's leadership.

“Spirent was a conglomeration of companies,” Sheth said. “He has pulled it together and made it a unified communications company.”

And Gustafsson himself is bullish about the telecom industry opportunity.

“We believe this business has the best potential to drive future top- and bottom-line growth,” he said.

He, no doubt, will continue traveling the world to keep communicating that. Frost & Sullivan's Cavazos said she recently pointed Gustafsson to a road warrior contest being held by American Airlines.

“I told him he should enter,” she said. “He'd probably win.”


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