Ottawa’s DragonWave acquired by U.S.-based Transform-X


DragonWave, one of Ottawa’s most prominent telecom firms over the past decade, says it’s been acquired by an Arizona company.

The move follows years of financial losses prior to a court-appointed receiver taking control of the wireless networking company this summer.

Documents filed in court say Transform-X intends to retain “substantially all” of DragonWave’s roughly 135 employees and that the firm will make employment offers to at least 85 per cent of the company’s workforce.

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Transform-X is reportedly a newly formed company based in Tucson, Ariz. The self-described technology firm appears to have a minimal online presence, but raised US$1.1 million last month, according to SEC filings.

The sale follows DragonWave’s delisting from the Toronto Stock Exchange and an exodus of directors over the summer that signalled the end for the once-promising technology firm.

The acquisition comes after a series of significant financial losses at the Kanata company, which saw its revenues plummet from $158 million (all figures U.S.) in fiscal 2015 to an expected total of only about $36 million this year.

The firm suffered a major blow in late 2015 after Nokia – which historically provided a significant portion of DragonWave’s revenue as an original equipment manufacturer sales channel – acquired DragonWave competitor Alcatel-Lucent.

The firm’s total revenues from the Nokia sales channel dropped from $84 million – more than half its total sales – in fiscal 2015 to just $11 million, or about a quarter of its total revenues, in 2017.

It wasn’t the first time DragonWave’s sales took a hit due to its reliance on a single customer.

In early 2010, the firm raised its outlook after sales jumped more than 400 per cent in its fiscal third quarter. However, most of that growth came from Virginia-based customer Clearwire, and when the U.S. firm delayed the rollout of its next-generation network, DragonWave’s revenues subsequently plummeted.

Transform-X was one of five bidders that made an offer for DragonWave, which will now be known as 3517667 Canada Inc. While the purchase price was not disclosed, court filings said DragonWave owed its senior secured creditors $17.2 million, plus interest and fees.

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