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Enablence Sells Off PON Systems

Jeff Baumgartner
8/30/2011

Enablence Technologies Inc. (Toronto: ENA) announced moves late on Monday that will close down the company's systems operations.

The Trident7 product line is being sold to cable access-gear specialist Aurora Networks Inc. for US$5.1 million, a deal expected to close by Sept. 15.

Aurora is expected to pick up 25 Enablence employees.

Enablence is also selling its MAGNM FX product line to FX Support LLC for undisclosed terms and expects to divest its International Systems business, based in Israel, by Sept. 30.

To top it off, Enablence is laying off about 40 employees, representing pretty much all that's left of its systems business in the U.S.

The company's focus will now be on its joint venture with China's Sunsea Telecommunications. The joint venture was supposed to have launched this summer; Enablence is now targeting the end of the year.

The Trident7 deal marks the second acquisition for privately held Aurora Networks, after GoBackTV Inc. in May. Aurora has about 250 employees and has been seeking ways to expand its business; at last check, its annual revenues were believed to be roughly $150 million.

Why this matters
Enablence is going back to its roots selling transceivers based on planar lightwave circuit (PLC) technology. New CEO Tim Thorsteinson took over in early 2010 and announced this direction (and the death sentence for systems) four months ago.

Enablence's goal had been to find markets for its planar lightwave circuit (PLC)-based PON transceivers, and former CEO Arvind Chhatbar had hoped that selling systems would be a better way to get the attention of big carriers. Optical networking is still a tough business for a small player, though, and Enablence's plan didn't work out.

For Aurora, adding Trident7 -- which Enablence acquired with Wave7 for $13.9 million -- can help in areas where cable operators happen to run telephony networks in addition to hybrid fiber/coax (HFC). Aurora already had EPON technology, and this deal will add GPON for the first time, said Scott Weinstein, Aurora's vice president of new business development.

Trident7 also will complement Aurora's portfolio of Radio Frequency Over Glass (RFoG) gear, which lets cable operators build fiber-to-the-home networks while preserving their headends, back-office systems and use of RF-based digital cable set-tops and Docsis modems. RFoG, targeted largely at greenfield areas, doesn't necessarily give MSOs much of a speed advantage, but it is designed to support PON overlays.

For more
Here's a summary of Enablence's recent history and a little more about Aurora's situation.





— Jeff Baumgartner, Site Editor, Light Reading Cable, and Craig Matsumoto, West Coast Editor, Light Reading



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^Eagle^
^Eagle^
12/5/2012 | 4:55:06 PM
re: Enablence Sells Off PON Systems


Well,


it is not like many of us didn't predict something like this back when the acquisitions were happening.


What ever happened to that unabashed enablance pumper who was all over these boards back when the acquisitions were happening, and who tried to trumpet all their little design wins for small systems deals as indicators that enablance success was right around the corner.


sad thing is this distraction burned through their cash, diminished their respect in the markets for their base PLC technology, slowed their R&D, and took away focus from where it should have been.


Imagine how much stronger the company would have been if they had not wasted those funds buying arguably weak players in the systems side of things.... players that had no market advantage nor technology advantage... but rather had minded their "p's & q's" and invested those dollars in their components business, using them to develop something the market wanted and needed.


That is the only way to win in this game.  Buying companies to have a "me too" system platform(s) is a zero sum game.  


I'll bet all the excellent design engineers they lost over the years would agree.


let us see know if they have enough strength, uuumph, and financial runway to make a go of it under this new leadership.  or if they will ultimately fail due to burning resources on these follies and fail due to their hubris like so many others.


It kind of looks right now like one other promising set of technology and R&D are going to china after poor management burned through the resources and funding.


sailboat

Polder
Polder
12/5/2012 | 4:55:05 PM
re: Enablence Sells Off PON Systems


Why do I get the sense that there is a lot of laughing going on in Petaluma these days.  My favorite quote a while back was on these boards when someone asked abou the synergy of a Telstrat/Pannaway merger.  It refered to tying two bricks together and throwing them in a pond.


The acquisition of W7 by Enablence wasn't total stupidity.  The subsequent purchase of Pannaway was...and then letting the Pannaway team take over the sales and marketing was insane.  The MAGN product line was a kludge compared to the T7 and domestic sales cratered when the Einsteins at P-way focused on the MAGN for domestic sales.


A more inteligent approach would have been to integrate the DSl capabilites in the MAGN into the T7 platform and go forward with a single, integrated product.  The egos at P-way prevented it from happening and I am sure the survivors at W7 are having the last laugh.


I sure wish someone would have paid me $700K per year like Arvind to make these brilliant decisions....

DCITDave
DCITDave
12/5/2012 | 4:55:05 PM
re: Enablence Sells Off PON Systems


1) What ever happened to Arvind Chhatbar? Is he still there?


2) How many systems companies did Enablence buy again? 3? 4?


This is a pretty big reversal of a lot of systems hype. Definitely something to remember the next time these fellas make some noise about anything.

paolo.franzoi
paolo.franzoi
12/5/2012 | 4:55:05 PM
re: Enablence Sells Off PON Systems


sailboat,


To cheer you up, I hunted the older links and found the 9 page thread that really kicked off Danp.  In the spirit of Harvey Mudd, I give you....


 


http://www.lightreading.com/do...


 


seven

Polder
Polder
12/5/2012 | 4:55:04 PM
re: Enablence Sells Off PON Systems


Arvind is still the chaiman of ENA, you can pick it up for C$0.065 on the TSX exchange.  I suspect TO Dan might finally be willing to let go a few of his shares at this point.  Sad to think he might be kicking himself for not selling at C$0.22 a few months ago.


If I were a gambling man, I would suspect Arvinds days of raising venture cap are on hold for the near future.  A quick recap of the last few years reveals:


May 2009 -  W7 $15M


Nov 2009 – PW $13M


Oct 2010 – Teledata $50M


Operating income loss over 2 years ~$25M


Net Proceeds from sale of W7 and “FX support, inc” ~$3M


Total Net loss over 2 years of ~$100M


At least W7 was a lean ship with a great product, although with no idea how to market it when the MSO's decided to wait on FTTH to mature.  It was designed with MSO's in mind but it was independent Telco's and Muni's that paid the day to day bills.  Ironic that the product should end up in the hands of Aurora but that is possibly the best outcome.  It also opens up the international market for Aurora that might prove useful.


PW was a bloated pig with huge overhead and serious technical shortcomings. They spent money like drunk sailers and were the victims of some huge egos.  I'm almost surprised ENA didn't have to pay someone to take over the PW assets.


So, your FTTH players in the US are now:

<ol>
<li>Adtran</li>
<li>ALU</li>
<li>Calix</li>
<li>Dasan</li>
<li>Moto</li>
<li>Tellabs</li>
<li>Zhone</li>
</ol>

&nbsp;




paolo.franzoi
paolo.franzoi
12/5/2012 | 4:55:04 PM
re: Enablence Sells Off PON Systems


I don't think anybody is laughing about Enablence in Petaluma.&nbsp; Nobody ever considered them or any of the companies that they bought serious competition.&nbsp;


(To pick on LR) It would be like the Wall Street Journal laughing about problems at Light Reading's business reporting.&nbsp; Think the WSJ considers LR competition?


&nbsp;


seven


&nbsp;

Polder
Polder
12/5/2012 | 4:55:03 PM
re: Enablence Sells Off PON Systems


I think you missed my point which was more about all the money that went down the drain on these solutions.&nbsp;&nbsp; I&nbsp;know that W7 burned through over $100M of venture cap, only to be sold for $15M and then parted out for under $5M.&nbsp; I suspect similar numbers are involved at PW although I would be guessing.&nbsp; Combine&nbsp;a net $200M+ lost between the two companies and the subsequent $100M or so lost by ENA, and it is a sobering amount of money.


I used to tease people in Petaluma that their burn rate and the amount of money raised/spent over the years would lead to profitability issues.&nbsp; So far, they have done a good job of proving me wrong.&nbsp; Don't kid yourself, at one point Calix was interested in the W7 RF Overlay solution and their international business.


It is a tale of two routes and results of spending $300M+ chasing the tier two and tier three Telco market.&nbsp; Makes me wonder if Zhone should invest in a living will...

paolo.franzoi
paolo.franzoi
12/5/2012 | 4:55:02 PM
re: Enablence Sells Off PON Systems


&nbsp;


Polder,


The optical comm bubble built many companies that chewed through $100M+ and died ugly deaths.&nbsp; I saw you listed it in alpha but I would think the list would really look like:


1. ALU


2. Calix


3. Tellabs


4. Adtran


5+ Others


Yes, I think from the reports I hear that Tellabs is still selling more BPON ONTs to Verizon than Adtran or others are selling PON systems.&nbsp; The real question is can Adtran make a race of it with Calix or not.


The others are non-factors even if they keep going.


seven

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