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A spinout of Flextronics — Aricent, which is comprised of several communications software assets including Hughes Software and noted design firm Frog Design — has scored $60 million in capital to expand its operations. Proceeds from the funding, which involved Bahrain-based investment fund The Family Office along with Kohlberg Kravis Roberts & Co., will be used to open an office in the Middle East as well as to handle growth at the Palo Alto, Calif.-based services company.
As communications companies face increasing pressure to build and design more user-friendly products, Aricent needs to expand in order to keep up with demand for its services. The company is pitching its combined communications expertise and Frog Design employees as a dream team capable of helping handset makers create the next iPhone or carriers to create a customer web site that rivals Amazon.com’s.
The design team has added value to Aricent as carriers and handset makers focus more on the user experience, says Keith Higgins, VP of marketing. When it spun out of Flextronics two years ago, Aricent had a $900 million valuation, but with the latest round of funding that valuation has gone up, Higgins said, though he declined to disclose specifics. Aricent reported $470 million in sales on an annualized basis as of its most recent quarter, and is cash flow positive.
More than two dozen firms are using the combined talents of the communications engineers and the Frog designers — from Sprint for handsets to Alltel, which used Aricent to design its Celltop mobile portal. Aricent hopes its upmarket design services could push it ahead of firms such as Wipro and Sasken, which also claim a large chunk of spending by communications firms on outsourcing. Apparently its backers believe it will.