Arrow Electronics has acquired Cross Telecom, a national networking solution provider and one of Avaya's top partners, in a move that expands Arrow's unified communications and manages services capabilities significantly.
It's the second time in the past year Arrow has acquired a solution provider with a large networking and UC footprint, following Arrow's August 2010 pickup of Shared Technologies. It's also a continued change of direction for Arrow, which for years marketed itself as the only enterprise distributor that didn't sell to end users.
Financial terms of the acquisition were not disclosed. Cross, based in Bloomington, Minn., has about 315 employees, and did $120 million in sales for the year ended Dec. 31, 2010. Its many specialties include voice, data, IP telephony, wireless networking and maintenance and support under its CrossNet brand.
Cross was Avaya's 2010 Avaya Connect Partner of the Year, and it's also an Extreme Networks Diamond partner, among other relationships on its line card. In 2009, Cross sold its Cisco-centric networking business to Datalink to put more focus on its Avaya relationship.
According to Arrow, Cross will be managed through Shared, which currently operates as a wholly-owned subsidiary of Arrow. No information on what becomes of Cross Telecom's executive team was immediately available.
"This acquisition is a continuation of Arrow's strategy to expand into faster growing, high-margin services that complement our global ECS business," said Andy Bryant, president, Arrow Global ECS, in a statement. "Cross strengthens our customer and supplier relationships as well as our industry and technical expertise in the unified communications, telephony and managed services industry."
Having Cross in its quiver not only greatly increases Arrow's networking capabilities, but also makes it a commanding player in the Avaya and former Nortel channels -- as a single-tier reseller. Shared, Arrow's previous acquisition, was as of 2009 Nortel's largest VAR in the U.S., before Avaya acquired Nortel's former enterprise business later that year.
The Cross acquisition is a sign Arrow is doubling down on unified communications, said Brian Alexander, managing director, equity research, technology hardware/distribution/EMS at Raymond James & Associates. In a Monday research note, Alexander noted that Arrow now has a roughly $500 million presence as a UC solution provider.
"While the acquisition is not material from a financial perspective, it does clearly indicate that Arrow is committed to the UC space following its foray into the single-tier reseller business in 2010," Alexander wrote. "At the time, we initially voiced our concerns that Arrow would eventually be competing with some of its reseller customers, who could extend their focus beyond IT infrastructure into unified communications. However, we should note that despite this convergence of voice and data technologies, Arrow's computing results have not been affected by this trend to date and have been much better than peers over the last few quarters."
The acquisition by Arrow of Cross is only the latest in a series of sweeping mergers and acquisitions of particular relevance to the Avaya channel. Carousel Industries, based in Exeter, R.I. and another top Avaya partner, has been on a run of acquisitions of Avaya- and Nortel-centric solution providers along with other VARs and integrators. And Xeta Technologies, a midwestern Avaya stronghold, had bought a number of Avaya and Nortel shops before itself being acquired by Paetec in February.