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Endwave begins acquisition hunt with Oak cash

Armed with $45 million from former venture backer Oak Investment, RF module specialist Endwave looks around for potential acquisition targets.

High-frequency RF module supplier Endwave says that it is looking to make acquisitions following a $45 million cash injection from Oak Investment Partners.

The Sunnyvale, CA, company sells microwave modules to the likes of Nokia and Siemens for wireless infrastructure applications, as well as millimeter-wave modules for defense and security use. Because of the high frequencies used, GaAs-based chips lie at the heart of many of its products.

Oak, which originally backed Endwave with venture funds prior to its initial public offering of stock, has now purchased 300,000 shares at $150 each.

The cash significantly strengthens Endwave's balance sheet, although the Californian firm says that it was not needed for ongoing business operations.

Endwave has just enjoyed a record first quarter, in terms of revenue, posting sales of $13.7 million compared with $9.1 million one year ago.

Much of that business came from its three key customers in the wireless arena "“ Siemens, Nokia and Nera Networks.

While Nokia and Endwave have a long-standing supply relationship, until recently Nera and Siemens sourced RF modules internally. Siemens and Endwave have now entered into a multi-year contract and the German company accounted for 30% of Endwave sales in the recent quarter.

"Sales growth was led by strong demand from Siemens and Nera, and was driven primarily by 3G network expansion in Western Europe," said Endwave CEO Ed Keible.

Keible added that defense and security applications were growing fast and accounted for $3.2 million sales in the recent quarter. The acquisition by industrial giant L3 Communications of fellow Californian firm SafeView, which makes imaging scanner systems based on millimeter-wave using Endwave modules, should help that figure to expand in the future.

Despite the record opening quarter to the year, Endwave still posted a net loss of $1.2 million. The company will be keen to ensure that any acquisitions it does make will be profitable enterprises.

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