Ambient Corp., a long-time grid communications player that went bankrupt last year, has managed to find a buyer with an interest in keeping Ambient's technology alive. Swedish telecommunications giant Ericsson announced Wednesday that it has completed its acquisition of the Newton, Mass.-based company for a bargain-basement price of $7.5 million.
We’ve covered the rise and fall of Ambient’s financial fortunes, which were tied to its deal to supply its grid-node communications modules to U.S. utility Duke Energy. The company’s other projects were unable to make up for the gap in revenues that came when Duke stopped buying Ambient’s nodes, and the company filed for Chapter 11 bankruptcy protection in July after being unable to find a buyer.
Ericsson announced that it is folding Ambient into its Global Services organization, a move it believes will boost its "ability to help utilities maximize their investments in smart grids.” Ericsson provides communications for many smart grid projects around the world, including a project linking some 600,000 smart meters in Sweden for utility E.ON, a 630,000-smart-meter project with Landis+Gyr in Estonia, an industrial gas metering project with Italian utility Italgas, and work with Australian utility SP AusNet to network meters via 3G cellular.
Ambient’s bankruptcy petition listed $1.75 million in assets and $3.54 million in debt (PDF). The once-publicly-traded company was delisted from the Nasdaq stock exchange in July, and suspended its reporting obligations to the U.S. Securities and Exchange Commission in August.
Ericsson set out a $7.5 million stalking-horse bid soon after Ambient filed for bankruptcy, setting a floor price for potential competing bids. Ericsson also agreed to hire Ambient’s current employees and maintain all of them at their current salaries as part of its agreement, though the company's CEO and COO may see their compensation reduced, Wayne Weitz, managing director of Gavin/Solmonese LLC, the firm hired as financial advisor for Ambient's bankruptcy proceeding, told us in an August interview.
“Ambient has some wonderful intellectual property and a fantastic R&D team, but it doesn't have the depth of balance sheet or cash to weather any kind of downturn or transition, or to be able to take advantage of opportunities with customers,” he said. “With a stronger balance sheet behind it, it will have a better chance to penetrate the market.”
Ambient was founded in 2002 to provide broadband-over-powerline technology to utilities, only to switch its focus when it became clear that utilities weren’t going to be able to compete with telcos and cable providers by using their power lines as broadband pipes. (Current Group and BPL Global, two other former broadband-over-powerline companies, have followed similar paths, only to be acquired in the past two years.)
Ambient’s answer was to turn to its grid nodes -- modular, multi-communications-capable devices that link smart meters, grid sensors and other networked devices on the grid. Its first big customer was Duke, which has deployed about 100,000 of Ambient’s nodes for its smart meter projects in the Cincinnati, Ohio region, as well as in a much smaller deployment in Raleigh, North Carolina. But as the Duke contracts wound down, Ambient was unable to secure more customers, and its revenues plummeted.
Duke still has millions more customers it has yet to smart-meter in its service territories in the Carolinas and Indiana. But it’s far from clear that the utility will continue to work with Ambient on these projects. In April, Cisco smart grid partner Itron announced that it had a “significant agreement” with Duke that could see Cisco and Itron’s technology used for Duke's broader plans for grid networks that combine smart meters, distribution automation, volt/VAR optimization and distributed energy resource management.
In other words, Ambient’s concept of an integrated, multi-communications node device to network the grid edge is not unique, and it will face stiff competition on that front. The company does have other technologies on offer, including power quality monitoring technology it has piloted in the U.K. In June, it launched a project with Consolidated Edison to link legacy commercial and industrial meters to the New York utility's new smart grid networks.