Have no doubt — video is the new voice, as Dialogic proudly touts. The company so firmly believes in video that it has grown from preaching the gospel of voice to the gospel of video. And now it has found its bride, Veraz Networks (who will take on the Dialogic name). There are a few notable challenges in IP video, the greatest being in video delivery for this is such a multi-faceted topic, ranging from codecs and compression algorithms to network infrastructure and optimization. I wish the best for the new couple!

SAN JOSE, Calif., May 12, 2010 (BUSINESS WIRE) — Veraz Networks (VRAZ 1.12, +0.11, +10.89%) , a leading provider of bandwidth optimization and next generation switching products, and privately held Dialogic Corporation, a pioneer in enabling interactive mobile video services and applications, today announced that they have entered into a definitive agreement to merge.

After closing, the name of the merged company will be Dialogic, and it will be a global leader in communications products and services to the telecommunications service provider and enterprise markets. The merged company is expected to be led by Nick Jensen as Chairman of the Board and Chief Executive Officer (current Chairman of the Board and Chief Executive Officer of Dialogic), and Doug Sabella as President and Chief Operating Officer (current Veraz President and Chief Executive Officer), with headquarters in San Jose, CA.

“While the capability of mobile networks around the world has been steadily expanding, the future will bring even greater demands on the networks due to the unprecedented growth in global mobile data and video traffic, “said Nick Jensen, Chairman of the Board and CEO of Dialogic. “By combining Dialogic’s proven expertise in application enablement for voice and video with Veraz’s leadership in voice, data, session control, security, and transport we will be creating a company with innovative products that will enable our customers to unleash the profit of video, voice and data for 3G/4G networks.”

Over 80% of the Fortune 2000 companies and service providers worldwide rely on Dialogic’s application-enabling technologies, putting Dialogic at the forefront of enabling high quality video on wireless and wireline networks. Today, over 130 service providers in over 80 countries rely on Veraz’s next generation switching and bandwidth optimization products and services to leverage the power of IP to deliver high quality voice and data services while lowering their operational and capital costs.

“The merger of Veraz and Dialogic will create a new and exciting company with the product portfolio and resources to be a true mission critical supplier to service providers,” said Doug Sabella, President and CEO of Veraz Networks. “The combination of Veraz’s direct global footprint and Dialogic’s channels will create a company of substantial size with global reach and resources, thus allowing our customers to be extremely confident when they choose to partner with us.”

Following the merger and subsequent integration of the two companies, on an annualized basis (after excluding adjustments to revenue and expenses under purchase accounting rules, transaction related costs and one-time charges), the merged company revenues are expected to be greater than $250 million with gross margins of 60-65% and EBITDA of 10-15% of revenues (earnings before interest, taxes, depreciation, amortization, and stock compensation expenses and including expected operational cost synergies). The merged company will have a diverse customer base with no customer concentration.

Under the terms of the agreement, unanimously approved by each company’s Board of Directors, Veraz will issue shares of its common stock to each Dialogic shareholder so that following the closing of the transaction, Dialogic shareholders will own approximately 70% and Veraz shareholders will own approximately 30% of the merged company. For further information regarding the acquisition agreement, interested parties should refer to the Form 8-K filed by Veraz on or about this date. The transaction is expected to close in the second half of 2010, subject to regulatory approvals, shareholder approvals, and customary closing conditions.

Veraz is currently traded on NASDAQ and it is expected that the merged company will continue to be traded on NASDAQ. The merged company is expected to benefit from operational cost synergies and is expected to realize revenue synergies by combining complementary product portfolios, as well as by optimizing the established global sales and distribution channels.

Jefferies & Company, Inc. acted as the exclusive financial advisor to Dialogic, and Pagemill Partners acted as the exclusive financial advisor to Veraz.

Veraz Networks and Dialogic will host a conference call for investors on May 13, 2010 at 8:30 a.m. Eastern Time which will also include forward-looking information. The webcast and a presentation regarding the merger will be available from the “Investor Relations” section of the Veraz website (www.veraznetworks.com). For parties in the United States and Canada, call 1-800-860-2442 to access the conference call. International parties can access the call at +1-412-858-4600.

The webcast will be archived for a period of 90 days. A telephonic replay of the conference call will also be available two hours after the call and will run for two days. To hear the replay, parties in the United States and Canada should call 1-877-344-7529 and enter passcode 60000#. International parties should call +1-412-317-0088 and enter passcode 60000#.

About Dialogic

Dialogic Corporation is a leading provider of world-class, innovative technologies based on open standards that enable innovative mobile, video, IP, and TDM solutions for Network Service Providers and Enterprise Communication Networks. Dialogic’s customers and partners rely on its leading-edge, flexible components to rapidly deploy value-added solutions around the world. Information about Dialogic is available at http://www.dialogic.com/. Also, join our social networking community, the Dialogic Exchange Network (DEN), at www.dialogic.com/den or visit our Facebook, Twitter and YouTube pages for additional Dialogic news and updates. Dialogic is a registered trademark of Dialogic Corporation.

About Veraz

Veraz Networks, Inc. (VRAZ 1.12, +0.11, +10.89%) , is the leading provider of application, control, and bandwidth optimization products that enable the evolution to the Multimedia Generation Network (MGN). Service providers worldwide use the Veraz MGN portfolio to extend their current application suite and rapidly add customized multimedia services that drive revenue and ensure customer retention. The Veraz MGN separates the control, media, and application layers while unifying management of the network, thereby increasing service provider operating efficiency. Wireline and wireless service providers in over 60 countries have deployed products from the Veraz MGN portfolio, which includes the ControlSwitch(TM), Network-adaptive Border Controller, I-Gate 4000 Media Gateways, the VerazView Management System, and a set of prepackaged applications. For more information regarding the company, please visit www.veraznetworks.com.

This press release contains forward-looking statements regarding future events that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results. Potential risks and uncertainties include, among others, the possibility that the transaction will not close or that the closing may be delayed, the anticipated synergies of the combined companies may not be achieved after closing, the combined operations may not be successfully integrated in a timely manner, anticipated revenues, gross margin and operating income may not be achieved, general economic conditions in regions in which either company does business may have a negative effect on their respective businesses, and the possibility that Veraz or Dialogic may be adversely affected by other economic, business, and/or competitive factors. Additional risks and uncertainties that could cause Veraz results to differ materially from those expressed or implied by such forward-looking statements include but are not the other risks and uncertainties described more fully in Veraz documents filed with or furnished to the SEC. More information about these and other risks that may impact Veraz’ business is set forth in the “Risk Factors” section in Veraz Annual Report on Form 10-K for the year ended December 31, 2009 as filed with the SEC. This filing is available on a website maintained by the SEC at http://www.sec.gov/. All forward-looking statements in this press release are based on information available to Veraz as of the date hereof, and we assume no obligation to update these forward-looking statements. A copy of this press release can be found on the investor relations page of Veraz’ website at www.veraznetworks.com. (VRAZ -IR)

Additional Information about the Proposed Transaction and Where You Can Find It:

Veraz plans to file a proxy statement with the Securities and Exchange Commission relating to a solicitation of proxies from its stockholders in connection with a special meeting of stockholders of Veraz to be held for the purpose of voting on the issuance of Veraz common stock in connection with the proposed transaction. BEFORE MAKING ANY VOTING DECISION WITH RESPECT TO THE PROPOSED TRANSACTION, SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT AND OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The proxy statement and other relevant materials, and any other documents filed by Veraz with the SEC, may be obtained free of charge at the SEC’s website at www.sec.gov. In addition, stockholders of Veraz may obtain free copies of the documents filed with the SEC by contacting Veraz’s Investor Relations department at (408) 750-9400 or Investor Relations, Veraz Networks, Inc., 926 Rock Avenue, Suite 20, San Jose, California 95131. You may also read and copy any reports, statements and other information filed by Veraz with the SEC at the SEC public reference room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 or visit the SEC’s website for further information on its public reference room.

Veraz and its executive officers and directors may be deemed to be participants in the solicitation of proxies from the stockholders of Veraz in favor of the proposed transaction. A list of the names of Veraz’s executive officers and directors, and a description of their respective interests in Veraz, are set forth in the proxy statement for Veraz’s 2010 Annual Meeting of Stockholders, which was filed with the SEC on April 30, 2010, and in any documents subsequently filed by its directors and executive officers under the Securities and Exchange Act of 1934, as amended.

If and to the extent that executive officers or directors of Veraz will receive any additional benefits in connection with the proposed transaction that are unknown as of the date of this filing, the details of such benefits will be described in the proxy statement and security holders may obtain additional information regarding the interests of Veraz’s executive officers and directors in the proposed transaction by reading the proxy statement when it becomes available.

Who doesn’t love SIP these days? Companies big and small these days are high on sipping. With that came a market for SIP trunking for wider adoption and cost savings, and border demarcation (i.e. Session Border Control) for security and conversion.

SIP trunking services are offered by the ISPs and IP carriers. Forget about the PSTN to merge your corporate telephony network — go with SIP trunks and all of your enterprise phones could talk to each other in a short time. Of course, that’s assuming you’ve deployed a trusty VoIP solution.

But when the VoIP call has to go outside of the corporation, what happens? That’s when media gateways and session border controllers (SBCs) come to play. Media gateways are normally sold by the telephony vendors as well, especially the traditional TDM PBX vendors because of their migration path to VoIP. The new market where money is made is in VoIP border control and security. Right now Acme Packet leads the pack in that area, but others like Dialogic are starting to salivate over that piece of pie…

It appears that Dialogic is planning to stuff every feature possible into a new gateway product — in essence, “Lord of the Gateways”:

We are in the process of developing a new product which we are currently calling the Dialogic Border Gateway. The Dialogic Border Gateway will enable the connection of virtually any type of network trunk, either a PSTN Trunk or a SIP Trunk, with virtually any premise based PBX, legacy TDM PBX, hybrid PBX, or IP-PBX. The Border Gateway will also provide the required security functions to establish a demarcation point between the enterprise network edge and the service provider network. In future posts I will provide more detail on the Border Gateway product as well as some addition insight into the SIP Trunking market. I welcome others to share their insights in these areas as well.

Wow, can it also vacuum my house?! This will be a gateway to end all gateways. Details are still vague, but definitely keep an eye on this one.