Israel's Tech Edge Attracts Lucent

TEL AVIV, Israel -- Once again underscoring the huge potential of the Israeli high-tech sector, Lucent (LU Quote) earlier this week acquired the start-up Mobilitec, a developer of mobile content management software for telcos.

"This is another occasion in which a large corporation realizes that Israeli tech firms have the innovative solutions that they seek to enhance their existing product portfolios," says Kobi Gershoni, director of research at D&A Hi-Tech Information, a technology research firm based in Tel Aviv.

That said, "this deal is not surprising, since Lucent was already a major shareholder in this company," Gershoni adds. Lucent had previously participated in Mobilitec's financing rounds -- including a $10 million round in 2001 at a $30 million valuation -- together with Sun Microsystems (SUNW Quote), Singapore Telecom and several venture capital funds, according to the analyst.

The deal, Lucent's third-ever acquisition in Israel, is estimated to be worth about $75 million. Lucent expects the deal to close by the end of the year, roughly around the same time as its pending $10.8 billion merger with Alcatel (ALA Quote).

Mobilitec's technology, which offers a platform for managing and streaming content services over third-generation cellular networks, will enable Lucent to pack additional features into its existing product line. It will also enhance its capability to offer its clients, mainly telecom operators, everything from ringtone downloading to photos and live news feeds.