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Finisar Buys Its 100G Buddy

Ray Le Maistre
1/9/2014
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Optical components specialist Finisar is buying one of its industry partners, German vendor u2t Photonics AG, to boost its 100G portfolio. (See Finisar to Buy u2t Photonics.)

Finisar Corp. (Nasdaq: FNSR) is paying $20 million in cash and assuming debt of about $7 million to acquire u2t, which reported full year revenues of $33 million for 2013. The deal is expected to close before the end of January.

The deal will add u2t's indium-phosphide (InP)-based 100G high-speed receivers and photodetectors to Finisar's portfolio. But it will also give Finisar total ownership and control over the duo's collaborative efforts on InP-based IQ Mach-Zehnder modulators for 100G coherent applications, which were first announced in July 2013. (See Finisar, u²t Acquire 100G Tech.)

Finisar's plan is to combine all these elements with its own narrow-line-width tunable lasers so that it can offer integrated 100G coherent modules for the metro and long-haul transport markets, and then develop products for higher data rates and new telecom and datacom applications, and create form factors even smaller than the CFP2 module. (See OIF Updates on Optical Projects and Finisar Demos 100G CFP2.)

The move comes at a time when the market for 100G modules, where Finisar competes with the likes of Acacia Communications Inc. , Menara Networks , NeoPhotonics Corp. (NYSE: NPTN), and Oclaro Inc. (Nasdaq: OCLR), is set for a boost. The action in China is of particular interest to Finisar. (See 'China Hockey Stick' to Sweep Through Optical.)

Heavy Reading analyst at large Simon Stanley noted in his recent report, From 40/100G to 400G: A Competitive Analysis of Optical Modules & Components, that

    the introduction of second-generation pluggable optics is taking 100G networking for data centers and other enterprise applications into the mainstream market… The market for 100G networking in the all-important 80-500 km metro is rapidly taking off as vendors start delivering direct detect and coherent technology developed for the long-haul market in pluggable CFP optics developed for enterprise networks.

Finisar, which raised $225 million from the sale of convertible notes (bonds that can be converted into stock) last December, isn't the only optical components company that has splashed its cash to build up its 100G capabilities in recent times. (See NeoPhotonics Closes Lapis Deal and Mellanox Buys Silicon Photonics for 100G.)

— Ray Le Maistre, Editor-in-Chief, Light Reading

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GmBroucek
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GmBroucek,
User Rank: Light Beer
1/11/2014 | 1:26:11 AM
Re: Fnsr jdsu
My bad it was spirent that made those comments
GmBroucek
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GmBroucek,
User Rank: Light Beer
1/11/2014 | 1:19:26 AM
Re: Fnsr jdsu
The Cali'x pre announcement clearly states they need software and wifi and mobile and small cells, all the things jdsu has put in place the last 2 years. Fnsr is great because they don't have test and measurement but jdsu deserves a break and a second look and some recognition. If they don't come through this year in 14 then urn correct. This is the year do or die.
GmBroucek
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GmBroucek,
User Rank: Light Beer
1/11/2014 | 1:13:00 AM
Re: Fnsr jdsu
I totally disagree, they are still number one in components to service providers and nimbler one in test. They have just entered data com and are making good progress. They have retooled test and incorporated a lot of software and are increasing margins even with flat sales. They are cash flow positive for many quarters and have great client base.
Balet
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Balet,
User Rank: Light Beer
1/10/2014 | 12:29:21 PM
Re: Fnsr jdsu
I think even 10 years after the bubble bursting JDSU still thinks they are the kings of components, but they are not. Very heavy organization with too much overhead for so small company, too few open minded engineers and procurement people, not very good management. It is not a fact, it is just my opinion.
Balet
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Balet,
User Rank: Light Beer
1/10/2014 | 12:26:51 PM
Re: Only $20M deal
Agreed. The price is strangly low especially with u2t so well positioned with a number of large customers. Something just don't fit. Maybe investors just got tired?

 
tojofay
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tojofay,
User Rank: Light Sabre
1/10/2014 | 12:16:50 PM
Re: Only $20M deal
A valadation of inP PICS. 
Ray@LR
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Ray@LR,
User Rank: Blogger
1/10/2014 | 7:05:07 AM
Re: Fnsr jdsu
Certainly in terms of the Light Reading reporting, JDSU is not a blind spot - it's just that in the various reports cited and referenced, JDSU did not figure. Make of that what you will.
chuckj
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chuckj,
User Rank: Light Sabre
1/10/2014 | 6:41:37 AM
Re: Fnsr jdsu
What is there to mention? JDSU just spent $200 million for a company with 40 million annual revenue. They don't seem to be able to make money on their test and measurement business, something Agillent finds highly profitable. Their optical business is barely breaking even and the rest of the stuff are so disparate that are better off spun off. LTE is not their salvation if it has not been by now.
GmBroucek
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50%
GmBroucek,
User Rank: Light Beer
1/9/2014 | 11:15:08 PM
Fnsr jdsu
Why is there never any consideration for jdsu on the carrier component side or their relationship as a strategic partner with huawei and the opportunity that presents in china. Mention is always made about the other much smaller competitors and yet they seem ready have a great year in test and measurement and components due to small cell/lte
redface
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50%
redface,
User Rank: Light Beer
1/9/2014 | 6:19:50 PM
Only $20M deal
Wow!  $27 million in cash and debt for a company with $33 million revenue?  U2T must be in a stressed situation.  Otherwise the price should not be so low.
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