Life has gotten more complicated for Enablence Technologies Inc. (Toronto: ENA) in the past two years as the optical components company has acquired suppliers and possible competitors, but the company's chief executive says that's the future of this sector.
Arvind Chhatbar defends the acquisitions of fiber-to-the-home systems companies Pannaway Networks and Wave7 Optics Inc. as representing the vertical integration that a transceiver company like Enablence has to have.
"If we decided to remain a single-product transceiver supplier in the marketplace, our life would be very short," Chhatbar tells Light Reading.
The Canadian company has been trying to build its name on planar lightwave circuits (PLCs), integrated devices that don't require the amount of manual assembly of traditional optical components. Like everyone in the sector, though, Enablence has been having a difficult time of it.
The company acquired suppliers Albis and ANDevices in 2007, but the Pannaway and Wave7 moves were what really caught people's attention. It's reminiscent of the waning days of Corvis, when it acquired customer Broadwing in 2003, letting the original Corvis equipment fade out afterward. (See Corvis & Broadwing: Together At Last and Broadwing to Sell Corvis Business.)
That's not Enablence's plan, Chhatbar says.
The problem, to steal a catchphrase, is that optical companies don't get no respect. Too many companies are selling to what's been a dwindling pool of systems companies, a trend that keeps margins pushed downward. (See Optical Components: Still Too Crowded.) A part that's lower cost, or that emits less heat, doesn't necessarily gain the components company any price premium, Chhatbar says.
"The only way to do this is to be vertically integrated, backwards and forwards. When we do forwards integration, it obviously is associated with customers. How else can I do it?" he says.
By owning systems, Enablence can also get a head start with carriers, "instead of waiting for, say, Verizon Communications Inc. (NYSE: VZ) to issue an RFP that the Alcatels and others try to respond to, and they wait for that to be accepted, and then go to the components level," Chhatbar says. "If we did things like everybody else, we would not have the necessary competitive edge"
In a sense, Enablence's moves are similar to what Infinera Corp. (Nasdaq: INFN) did. Infinera's real product is the indium phosphide (InP) chip that integrates handfuls of optical components. But to make sure the chip got used to its fullest potential, Infinera built the system that goes around the chip. (See Infinera Declares WDM War.)
There's still the fact that Enablence is small and has never been profitable. Enablence finished its third quarter, which ended Jan. 31, with cash and equivalents of CDN$18.6 million (US$16.1 million), compared with CDN$32.2 million (US$27.9 million) three months earlier.
To pick up more cash, the company priced an offer on April 30 to sell 40 million stock shares at CDN$0.30 apiece (26 cents U.S.), which multiplies out to CDN$12 million (US$10.4 million).
Investors recently got a bit of good news when Enablence announced Fujitsu Ltd. (Tokyo: 6702; London: FUJ; OTC: FJTSY) as a customer. (See Fujitsu Selects Enablence.) "It is going to be a series of components that are PLC-based, mostly for the metro and long-haul markets, not fiber to the home," targeting Asian and North American carriers, Chhatbar says.
That would suggest it's a deal for ROADMs components, which one source outside Enablence confirms. That source also pins the value of the deal at less than $3 million; Chhatbar won't disclose any numbers related to the deal.
No pumping at all from the Disable-ence crowd. This does not bode well since Arvind would issue a press release if a stranger in an airport mentioned the company's name in passing
Disable-ence obviously is hoping to come up with some good press release stuff since it is obvious that they are hiding from their investors. The quarter ended at the end of APRIL and these buffoons still cannot report lack-of-earnings. As a matter of fact, two full quarters have gone by since the end of January and other than their fiber-to-the-pyramid story they don't have squat.
Tomato Dan is gonna jump!
I thought Tellabs was based on 1x4 (1x5) WSS, while Fujitsu was 1x9 (1x10). Fujitsu just recently got fully approved by Verizon, right? Tellabs system is slightly cheaper though, while 9500 seems to be better. Isn't it logical for FJ to take lead from Tellabs in say a year from now? Sorry again, if I see it wrong. Have been out of Tellabs/Fujitsu labs for a couple of years. Any latest scoop?
Dear Madoff_JR why did you steal my image, thanks tomato dan.
“danp5648, if Madoff_JR stole your image why did you never post any messages on the site Light Reading for him to Stop or asking why he stole your image?
I have gone back and researched all your posts on Light Reading and I have found no such confrontation with Madoff_JR and yourself. If he indeed did steal your image there should of been at least one confrontation between you and he.....
Im sorry but to me it seems as though you were having a conversation with yourself. Again to each their own, what I find disturbing is not the fact that you are talking with yourself but the manipulation of ENA information that takes place when you do something as such. We are trying to keep members informed about ENA not confused....Regardless what site it is on.”
To help you along, Fujistu is a second source on that selection to Tellabs and Tellabs was a sole source for at least 12 months. So, just FYI the business will be split and Fujistu is starting from behind.
Your request is simply not practical (try to give us some facts outside known PR?) and the PRIVATE EMAIL is not a PR or regurgitated anything. I sure hope E is not selling their chips to outside vendors to help them with there ROADM's but maybe they are. I am not HYPING anything since as you stated all my information is known or regurgitated as you put it. The best I can do is make connections which may or may not be connected at all which again does not match up with your reply. You are taking things out of context or denying a context. Also, as I said before, you will never see a PR listing the guts of the product and if I did publish the guts by buying the product and pulling it apart I am sure I would be sued which you already know is against the rules. The best you can do is say: I open that product and no connection with Enablence exist and that would be the end of it. It is your reply which is lacking wisdom or value since everyone already knows your arguments and my dilemma as an outsider.
More connections:
Fujitsu will source its PLC based component requirements from Enablence on an ongoing basis. May 4, 2009
Verizon has officially chosen the Flashwave 9500 Packet ONP for its FiOS backbone
DanP, FYI, I am not an Enablence basher. I would actually like to see them succeed. It would indicate a growth for our entire industry sector. So, really, I would enjoy seeing REAL success, as in positive margins, growing cash flow, a CEO who does not gouge the company with such extreme overpay, etc...
My problem is with the hype you continue to pour out and with you linking information on your own that was not linked by the actual originators of that information.
Let us see the next couple of quarterly reports. IF big E is really suppling what you imply they are, at the price points and margins you imply, it should start to show up in the cash flow position, margin numbers and other metrics that are clear from quarterly reports over the next 2-3 quarters.
we shall see.
Until then, try to give us some facts. Not simply regurgitated press releases that have already been covered in the press and not simply assumptions based on the very limited information in those press releases.
read your post. Clearly you have linked somethings in your mind that were never stated.
Never did Arvind say big E was selling ROADM's at 8-9k each. He said that the ROADM's used his PLC chips. you should note that the CHIP gets only a small part of the overall ROADM price. This is why many others like JDSU, NEO, Finisar, etc. do not sell the PLC chip, but only the fully integrated ROADM. A ROADM has lots of other stuff in it besides the PLC chips. VOA's, Monitors, control loops, heaters, packaging.. etc.
So, please, do not assume the PLC "CHIP" business is sufficient to save E.
2nd, in no place does anyone state that Fuji is using the E plc chips in the new 40G enabled ROADMs.
There are lots of ROADM flavors and types in Fuji and other companies various platforms. 40G passbands are not so easy (ask Neo and others).
you are taking some un related press releases from Fuji and E and tying them together where there is no such link announced in ANY of the statements or releases.
You are correct, I did not mean to imply that you were staying Gemfire was profitable. I was merely making a tongue in cheek comment that was intended to amplify your sentiments in your post regards Gemfire.
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