Bookham Gets Thin Film Filter Bargain
The deal "was structured as an asset sale" according to Steve Turley, Bookham's chief commercial officer. In other words, Bookham got Cierra for a knockdown price, equivalent to $2.25 million in Bookham stock. Further payments in stock will be triggered if sales reach targets over the next two years.
This compares with funding of more than $50 million that's been plowed into Cierra by investors including WorldView Technology Partners, Mayfield Fund, Soros Fund Management LLC, Chase Capital Partners, and RWI Group IV LP. The last funding round announced by Cierra was in October 2000 (see Cierra Photonics Raises $40M). It's unclear whether it's received further funding since then.
Bookham and Cierra have been working together on developing joint products such as optical add/drop multiplexers since last year (see Bookham, Cierra Team on WDM).
The decision of investors to throw in the towel and let Bookham acquire Cierra reflects an ongoing change in the marketplace for optical components. System vendors are moving away from building their own equipment from scratch. Instead, they're buying ready-made subsystems that they can simply bolt into place.
This translates into a shrinking market for discrete components from startups such as Cierra and a potentially expanding market for whoever can make integrated subsystems -- the catch being that players in this field need to have a wide range of active and passive technologies to work with.
That's what's behind Bookham's string of acquisitions. Its purchases of the components divisions of Marconi Corp. plc (Nasdaq/London: MONI) and Nortel Networks Corp. (NYSE/Toronto: NT) gave it active components such as transmitters, receivers, and amplifiers. The Cierra acquisition plugs a gap in its range of passive components, according to Turley.
Specifically, Cierra's thin-film technology will enable Bookham to address requirements for multiplexer/demultiplexer devices handling four, eight, or 16 wavelengths, the numbers typically used for coarse wavelength-division multiplexing (CWDM) equipment, which has become more popular recently. Bookham's existing Arrayed Waveguide Gratings (AWGs) come into their own for 20 or more wavelengths, numbers typically used in DWDM gear.
Turley says Cierra's thin-film technology is "the best there is." The company has particular strengths in designing components and in the manufacturing processes used to make them. He expects Bookham to retain most of Cierra's 39 staff.
Bookham will continue selling discrete components to existing Cierra customers, Turley adds.
— Peter Heywood, Founding Editor, Light Reading