JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU) is acquiring the Altamar Networks Inc. subsidiary of Ditech Communications Corp. (Nasdaq: DITC) for $1.6 million to $7 million in cash, depending on revenue performance, Ditech has announced.

The leaves Ditech to concentrate on its original technology -- echo cancellation products for voice networks.

JDSU is interested in Ditech's transponder and amplifier subsystems, as they play nicely into the company's plan to move up the ladder from raw components to subsystems. "We've been for some time increasing the level of integration with our products," and Altamar "augments our line of amplifiers and also our line of subsystems," a company spokesman says.

The spokesman wouldn't comment on what happens to Altamar's employees or its Mountain View, Calif., facility, saying those decisions haven't been completed. Ditech officials weren't immediately available to comment.

Considering it was founded to build a 16,000-port switch, Altamar went for a pittance: $1.6 million, with additional payments up to $4.9 million forthcoming depending on Altamar's revenues through June 2005. Moreover, Ditech may have to reimburse JDS for any Altamar inventory that remains as of June 2004.

The cautious terms aren't unusual these days, as a collapsed market has made component acquisitions chancy. JDSU should know; its acquisition hangover has included layoffs of more than 18,000 and goodwill writedowns in excess of $55 billion (see Sizing Up JDSU's Massive Loss).

Ditech is probably quite happy to return its focus to voice, as the echo cancellation products still account for three-quarters of the company's revenues, according to SEC filings.

Optical networking was always a stretch for Ditech, which got into the game with the 2000 acquisition of Atmosphere Networks (see Atmosphere Comes Back to Earth and Hazy Atmosphere Hangs Over Ditech). That laid the path for the March 2001 creation of Altamar, a subsidiary chartered with building an ambitious 16,000-port switch called the Titanium Optical Network System (see Altamar Unveils High-Density Switch).

Titanium was not to be. Ditech killed the project last September (see Altamar Cans Its Optical Switch), transforming Altamar into a subsystems play. By May, Ditech announced it was ready to sell the subsidiary (see Ditech Down, Altamar Out and Such Language!).

— Craig Matsumoto, Senior Editor, Light Reading