Glenn Lurie, CEO of Synchronoss, will host a business update call next week, but we already caught up with him to find out what’s going on at this most intriguing of companies.
We first spoke to Lurie in November of last year last year not long after he had become Synchronoss CEO. In the process of researching that interview saw that the company had both bought and sold a company – IntraLinks – in that same year, which seemed odd. So we did a bit more digging and uncovered a fairly remarkable sequence of events involving Synchronoss in the previous year or two.
At MWC earlier this year we got our first opportunity to speak to Lurie since that follow-up piece and started by asking him what that IntraLinks business was all about. The company had decided to diversify and made the decision to buy Interlinks for $821,” said Lurie. “The decision was about diversifying where they were playing and at the same time they broke off their call centre business called STI and we still have a piece of that. The idea was that the company didn’t feel they were getting the multiples they thought they deserved as a software player in the TMT space.
“Deals like that usually go really well or really badly and that one went badly. There was a massive culture clash between the organizations. The CEO of Interlinks was brought in to run all of Synchronoss and, candidly and respectfully, that just didn’t work. To the credit of the Synchronoss board, it reacted quickly and also noted that it had an asset that wasn’t necessarily growing as anticipated, not fitting in the portfolio, and ten months after buying it, sold it for just under a billion dollars.”
Once the dust had settled, one of Lurie’s first decisions was to accept $185 million of investment from Siris Capital – the private equity company that acquired IntraLinks from Synchronoss and seems to quite like the telecoms sector. This is positioned as a significant endorsement of Synchronoss now, as opposed to a year ago, which was the last time it filed any accounts.
Which brought us onto the matter of how things are going with NASDAQ, with which it is not in compliance thanks to those absent accounts. “I was personally part of a recent meeting with the NASDAQ and they saw our plans, understood the work we’re doing with our auditor, and were obviously impressed enough that they gave us the extension necessary to get it done,” said Lurie. “We can’t go public with everything yet, but we will. I’m excited to go public with the strategy, but for now all the things we can talk about – including the hiring of a number of established industry executives – are showing good progress.”
But why is it taking so long? When Interlinks came in there were some questions asked by that new leadership around what’s called ‘revenue recognition’,” said Lurie. “In the world of licenses, which is what we do, this can be very difficult in the sense that, if you get a license do you take that revenue in-quarter or over the life of the contract? And you work with your auditors to make those decisions. So once there’s a question you have to work through it with the audit committee, which in a sense put us into an audit situation. That takes a while, but once it’s done it puts us in the situation where we can start afresh.”
Another question mark we raised was around Founder and long-time CEO Steve Waldis, who didn’t seem to hit it off with the last guy he brought in to take the reins. I’ve known Steve 14 years, so we have a long-standing relationship,” said Lurie. “We did business together at AT&T since 2004, he’s a great guy to work with – very intelligent – and his reputation inside the carrier world is spectacular. Synchronoss has always been one of those incredible partners, versus just a vendor. When we (AT&T) were working with Steve Jobs, Tim Cook and the team, Steve (Jobs) did not want activation to be in the store in the original iPhone and built a separate activation inside of iTunes. Now we knew that was going to be difficult for a short period of time and our safety net for us at that time was Synchronoss.”
We concluded by asking about the longer-term strategy for Synchronoss, assuming it eventually gets things back on track, starts filing accounts, etc. Lurie sees a big role for Synchronoss, which does a lot of its business helping operators with the consumer cloud, in both IoT and 5G. On the IoT side, he feels his company can be agile and fit into the max how and when operators need them. He also feels many of the key characteristics of 5G play to Synchronoss’ strengths, not least in how it might change the nature of mobile devices.
When you start getting into 5G you get computing on the edge, you have latencies that are going to be almost real-time, you start to question how much resource needs to reside on the device,” said Lurie. “You get a true cloud backup world where now you can draw on the cloud quickly and I think that’s going to give device manufacturers flexibility to be more creative. So as things come out of the device I think we’re going to see another round of innovation.”
Since Lurie is, to the best of our knowledge, still the CEO of Synchronoss, things are already looking better than they did nine months ago. He certainly presented a clear vision of where he wants to go and the endorsement of various canny industry players, as well as the renewal of key contracts such as the Verizon one, announced today, make it easy to believe the worst is behind this enigmatic company. We will know more after the business update call.
At MWC 2018 we caught up with Ericsson EVP and head of its networks business Fredrik Jejdling to get a general update on the state of play there.
We started by noting that Nokia CEO Rajeev Suri made an apparent dig at Ericsson in his MWC keynote by saying that people should be suspicious about any claims made regarding the easy upgrade of networking to 5G via a software update. “First of all I of course feel a bit flattered, having competitors talk about our solutions in their keynote,” said Jejdling. “That’s means we must be on to something, in my view.”
We’ll let the market decide what it thinks the best way to approach 5G is, but we did ask Jejdling to share his 5G vision. 5G went from concept to reality a lot quicker than I thought it would,” he said, explaining that on top of the well-known use-cases he thinks there’s at least one other that gets less attention.
“We also see an enhanced mobile broadband case that may not have been considered before and could become the first use-case for 5G,” said Jejdling. “If we model traffic in our existing mobile broadband networks, we thing that by 2023 we’re going to see an 8x increase, and probably the best way to cost-efficiently handle that is by introducing 5G over time. We need to build networks that can deliver 8-10x lower cost per gigabyte. Evolving 4G into 5G makes sense, from a cost efficiency perspective, as traffic grows.
“Then comes the premise of 5G as it was designed for, which is connecting things. As an industry we’re looking at this opportunistically, with the US and China ahead of Europe right now. What we try to do is to take away the decision about 5G, because if you have our networks we want to make sure you can evolve them as and when needed.
“In a year’s time the first launches will have happened and we’ll be talking about applying 5G for real, which could mean VR applications, industrial use-cases such as robotics in manufacturing and IoT. We will be talking a lot more about the applications, rather than technology, of 5G. The silver bullet is very difficult to identify right now, which is why I think you need to be very pragmatic and listen to the market.”
We then moved on to Ericsson in general, and noted it has been a tricky couple of years for the company. Borje came in January last year and we’ve been going through what we call a more focused strategy, which means that we focus on the three areas of: networks, digital services and managed services,” said Jejdling.
“On networks we have significantly increased our investment in R&D by around 20% to firstly be able to get cost-efficient production platforms out on 4G, to meet the cost-per-gigabyte requirements of an operator. And then the second part of that increase in investment is 5G. It is, of course, important for us to be the 5G technology leader. So we have put a significant amount of investment both into the millimetre wave side, which is typically where the US is going, but also the mid-band side where you’ve got China, Japan and Korea.
“Our 2017 has been a year of transformation and it has been a challenging year, there’s no doubt about that. On the other hand I think it’s fair to say that we’ve improved our cash position by 5 billion SEK throughout the year. So I would say that we have transformed the company during this year, with 17,000 people leaving, recruiting 2,000 people in R&D and the assessments of certain projects. We will have finalised the cost reduction programme by the middle of this year.
“We’ve had a RAN market that declined by around 8% in 2017 and we more or less followed that. This year we expect it to be down around 2%, after that we expect it to be flattening and going up. Our ability to drive new platforms and technologies has enabled us to rank fairly highly in customer evaluations, which enabled us to win a few significant deals, such as Deutsche Telekom in Germany, Vodafone in the UK, Verizon 5G, Swisscom and a couple of others.”
Jejdling wisely didn’t attempt to brush his company’s recent struggles under the carpet but, as you would expect, he was keen to promote the narrative that things should improve from here. It’s clearly not enough to just wait for the market to pick up and Ericsson has done a lot of cost-cutting, but having said that it wants to be able to capitalise on increased activity as soon as it happens.
We finished by asking Jejdling if he had any message for Telecoms.com readers. We’re in a stronger position than we were a year ago,” he said. “We’re investing in the front-end with the customer and in the R&D side, and between them we have been looking at efficiencies like any company would. We live and die by talent and I think it’s a very interesting place to be. We’re a company that is recruiting top talent and my message to your readers is that we’re looking for people who want to be part of growing this company.”