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Mike
Nortel to buy optical networking firm QTera
TORONTO, Dec 15 (Reuters) - Communications gear maker Nortel Networks Corp. <NT.TO> <NT.N> said on Wednesday it signed a definitive deal to buy privately held optical networking firm Qtera Corp. for up to $3.25 billion in Nortel common shares.
Nortel, one of the world's biggest equipment makers, said part of the purchase price for Boca Raton, Florida-based Qtera -- a maker of equipment that delivers cheaper and better Internet performance -- was dependent on the private company reaching "certain business objectives."
Nortel said the acquisition would be neutral to earnings ashare in 2000 and will add to profit in 2001, when acquisition-related charges were factored out. The purchase is subject to regulatory and Qtera shareholder approvals. The number of shares Nortel would issue -- not more than 48 million nor less than 30 million -- would be based on the average price of the stock during a specified period before closing. The deal is expected to close in the first quarter of 2000.
Qtera's technology, which allows information to be sent as far as 4,000 kilometers or 2,500 miles as light without conversion to electronic signals, increases reliability and cuts costs for Internet traffic, Nortel said. Traditional technologies force frequent conversion from light to electronic signals and back again, adding to expense. The Qtera system operates at 10 gigabits or 10 billion bits a second, the speed used by leading Internet backbone networks, Nortel added.
"The surge in Internet usage and eBusiness makes the delivery of the high-performance, all-optical Internet essential," John Roth, Nortel president and chief executive officer said in a statement. "The addition of Qtera's capabilities enhances Nortel Networks ability to deliver to customers the greatest capacity, the highest speed and, now, the longest reach Optical Internet solutions in the market."
Qtera has about 140 employees in Boca Raton and roughly 30 in Richardson, Texas. On completion of the deal, it would become a wholly held unit of Nortel. Qtera president and chief executive officer Fahri Diner would continue as Qtera's president, Nortel said.
08:40 12-15-99
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