Brian - Article in USA Today about possible Cisco-Corvis deal. Sectors of the optical networking market are long haul, metro, optical cross-connects and access. The logical sector for Cisco to attack would be access for optical access for its enterprise customers. To my knowledge, Nortel does not have a presence in the optical access sector. Don't know about Lucent
usatoday.com:80/usatonline/19991216/1759278s.htm
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Cisco weighs buying upstart Networking
firm Corvis would fill high-tech niche
By Thor Valdmanis
and Shawn Young
USA TODAY
SAN FRANCISCO -- Cisco Systems is considering the acquisition of Columbia, Md., optical networking start-up Corvis Communications in a deal that could top $10 billion, sources close to the situation say.
The need to move was underscored after rival Nortel Networks' deal Wednesday to pay $3.25 billion for Qtera, which hopes to revolutionize how data traffic is moved in the Internet-driven economy.
Cisco-Corvis talks could get complicated should other potential suitors -- Lucent Technologies, France's Alcatel or Germany's Siemens -- turn pursuit of one of the last independent optical-networking firms into a
bidding war.
The price tag for Qtera unsettled some Wall Street analysts because the company has no revenue or products on the market. Nortel shares gained 9/16 to $88 5/8 Wednesday after falling when news of the takeover broke
last week.
Cisco shares suffered, dropping 2 1/16 to $95 7/8. Nortel is the optical-networking leader, with one-fifth of a $23 billion-a-year market that is expected to grow to $100 billion in the next five years. Sources say
Nortel first approached Corvis but was rebuffed.
Cisco, which already has a 9.9% stake in privately held Corvis, is hoping to persuade founder David Huber, Corvis' largest shareholder, to sell. Top venture capital firms Kleiner Perkins Caufield & Byers, New Enterprise
Associates and Kinetic Ventures also have significant stakes.
'Cisco needs to get into the optical-transport market in order to complete its vision,' says Chris Nicoll of Current Analysis. A Cisco spokesman
declined to comment.
Corvis Executive Vice President Glenn Falcao would only say: 'The Nortel acquisition emphasizes that this is a very hot market. We were built as a stand-alone company but obviously we have to be cognizant of our shareholders. If the right deal came along, we'd have to look at it.'
Qtera and Corvis have technology that makes it possible for fiber-optic networks to transmit signals much farther before they need to be electronically refreshed. That means carriers such as AT&T or Qwest
Communications, which send data long distances, could operate more cheaply.
'It's technology that clearly is complementary to Nortel's strong suit,' says Sanford C. Bernstein analyst Paul Sagawa.
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