Here is some industry related acquisition news:
LUMM could be next!
CIENA Acquires Terabit Technology,
Inc.
CIENA Corporation (Nasdaq) announced that it
has acquired privately held Terabit Technology,
Inc., in exchange for approximately 134,000 shares
of CIENA common stock, as well as
approximately $1.1 million cash and the assumption
of certain Terabit stock options.
Prior to the acquisition, CIENA had been a 20%
owner of Terabit, a developer of optical
components known as photodetectors or optical
receivers. Based on the closing price of CIENA's
stock on, April 21, 1998, the transaction is valued
at approximately $11.7 million excluding shares of
Terabit already owned by CIENA.
The transaction will be accounted for as a
purchase. Of the total purchase price,
approximately, $9.5 million will be accounted for as
in-process research and development, resulting in a
one-time charge which is expected to be dilutive to
the Company's second quarter fiscal 1998 earnings
in the range of $0.08 to $0.10.
''As was the case when we decided to produce
our own in-fiber Bragg gratings for optical filters,
we believe the proprietary technology being
pioneered by Terabit can provide CIENA with a
considerable competitive advantage, ultimately
enabling us to reduce equipment costs and improve
network performance,'' said Patrick Nettles,
CIENA's president and chief executive officer.
''While CIENA is not interested in pursuing
downward integration to the point of becoming an
optical component supplier, we will continue to
evaluate innovative component-level technologies
that enable us to further extend our technology lead
in transport systems.''
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Rapid Entry Into Metro DWDM Space Drives Nortel to Buy Cambrian for $300 Million
By Erik Kreifeldt
Time-to-market is the driving force behind Nortel Networks' acquisition of Newbridge's Cambrian Systems for
at least $240 million in cash—up to $300 million if revenue and market share numbers are met.
Citing a 67% share of the long distance equipment market, Nortel sees the acquisition of Cambrian as a quick way to beef up its presence in the metropolitan area network with a dense wavelength division multiplexing (DWDM) platform. After crusading to establish "mind share" and network trials for its OPTera metro DWDM product since the company's founding in 1996, Cambrian looks forward to leveraging Nortel's brand recognition, global presence, and network integration skills to get the product deployed.
"Technology by itself is not the weapon any more," says Nortel Networks vice chairman and CEO John Roth. "Time to market is the issue."
Winning in the metro DWDM market space is about being first to market and leveraging resources to maintain a strong market share, says Cambrian Systems president Don Smith. In addition to Nortel's support infrastructure, he says Nortel's network management expertise will enhance the OPTera platform and accelerate acceptance of the product.
"It's not just a matter of using network elements out there," Smith surmises, adding that Nortel's network management portfolio was a key factor that began the dialog between Cambrian and Nortel.
"I think its good for Cambrian, to say the least," says Trans-Formation optical networking analyst Mark Lutkowitz of the acquisition. "It's difficult to go it alone," he says, because large companies can squeeze small ones out of the market with price pressure. As for Nortel, "I think if you had to pick a supplier, that's the one to go for," he continues, explaining that Cambrian seems to be furthest along with DWDM survivable ring capability.
Initially, Nortel considered a strategic alliance with Cambrian in lieu of an acquisition. But buying Cambrian interactive proposition, due in part to a shorter chain of command offered by owning the
company versus a partnership. "If you really want to go fast, you've got to have it all," Roth says, explaining that design teams work faster with fewer people from whom to ask permission.
Nortel intends to maintain Cambrian's 170 employees, and will also send 40 design engineers to Cambrian's Kanata, Ontario headquarters to work on the product line.
Nortel's VP and general manager of Optical Network Applications, Brian McFadden, characterizes the OPTera platform as a "new optical networking paradigm" that will ease the communications bottleneck between enterprise networks and core carrier networks. Over the next provider markets and lure non-traditional DWDM customers such as large corporate network users. Cambrian is conducting lab trials with both service providers and enterprise network customers, adds Smith.
The OPTera sports survivable ring capability and 32-channel bit-rate independence from 100 Mpbs to 2.5 Gbps per channel. "To make an offering in the metro environment, you have to prove in at less than OC-48,"
McFadden says.
Headquartered in Kanata, Ontario, Cambrian Systems was founded in 1996 and became a Newbridge affiliate in March 1997. While Newbridge gives up its 40% stake in Cambrian, it maintains its Cambrian OEM relationship via Nortel. Newbridge recently launched a system that integrates Cambrian's DWDM technology with its MainStreetXpress ATM switch. Newbridge markets the switching platform in alliance with Siemens. |
