Former Alcatel-Lucent subsidiary LGS Innovations is in its early days of new ownership, and CEO Kevin Kelly is ready to expand the company’s reach.
LGS, headquartered in northern Virginia, was formed during the Alcatel and Lucent merger to serve the telcom needs of the U.S. federal government. The company focuses on secure communications and networking, as well as research and development in photonics, remote sensing, microtechnology and cybersecurity. But LGS faced some restrictions due to limits on foreign ownership and investment, as well as not conflicting with business operations of its parent company.
With the recent sale of LGS to investor groups Madison Dearborn Partners and CoVant for $200 million, the company now has domestic ownership and a free hand to enter new markets. “I think this is a liberating event,” said Kevin Kelly, CEO of LGS Innovations.
“We have brand new fields in play that are now open to us.” LGS continues to have a tight relationship with Alcatel-Lucent. It remains the exclusive reseller of ALU products and services to the federal government, and to resellers for whom the federal government is the end customer.
“The relationship with ALU has been wholly beneficial to our company. They’ve been a longtime supporter of our mission, and frankly, an investor and a very friendly owner of the business,” Kelly said. “At the same time, being a subsidiary of theirs, we had certain restrictions that were basic business rules and charter agreements that kept us out of each others’ way.”
That included Alcatel-Lucent addressing states and local jurisdictions while LGS exclusively served the federal government.
“We’ve often felt that we can and should be able to address that [market] effectively,” Kelly said. He added that with LGS no longer being owned by Alcatel-Lucent actually frees up the companies to partner in ways that were previously prevented by ownership and business rules.
One of those potential markets is public safety, where LGS offers its expertise in building secure, reliable networks for the military. LGS participated in an early trial project of a Band 14 public safety network in Hawaii several years ago, similar to the type of network that the First Responder Network Authority, or FirstNet, has been tasked to build nationwide.
“LGS has some very unique technologies that were developed specifically for tactical users, primarily trying to enable war fighters with 3G and 4G technologies,” Kelly said. “First responders’ needs, as described by FirstNet, are very similar to the tactical soldier.”
Other markets with needs for highly-reliable mission-critical infrastructure are also on LGS’ radar, including utilities, transportation, and banking, as well as opportunities in an Internet of Things world. In general, Kelly said that because the migration to cloud-based computing means that businesses don’t have the same level of control over their data and servers, this is driving a desire for precise, robust networks that can survive adverse events and attacks — the same kind of thought process in network design that the Department of Defense has been taking for years.
LGS has major facilities in New Jersey, Colorado and Illinois along with its northern Virginia headquarters, and has about 700 employees which were acquired in the purchase by the investor groups. Kelly said that the ownership transition involved “a few tweaks to the organizational structure, but in terms of roles and responsibilities, very few changes.”
While LGS expects to see growth from its broadened playing field, Kelly said that acquisitions are also a possibility and have already been a topic of discussion with the new ownership — as well as whether to buy new technologies or to put that money into LGS to develop its own.
“I think in this period, the roughly 700 folks here are eager to explore these new market areas,” Kelly said. “We analyze the heck out of things before we make a decision. … We’re going to take a real hard look at entering these new markets, with an analytical approach, and pick off a few areas that we think are best suited for our capabilities and expertise, and apply our resources.
“What we’re not going to do is go after this brave new world all at the same time.”
