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Broadwing to Sell Corvis Business

Service provider Broadwing Corp. (Nasdaq: BWNG) announced after the markets closed that it is putting its Corvis equipment division up for sale so it can focus on being a service provider. In addition to putting its equipment arm up for sale, the carrier announced that its president, Jim Bannantine, is resigning to pursue other interests.

Scott Widham, currently Broadwing's president of carrier accounts, is being promoted to a new position, president of sales, which merges oversight of Broadwing's previously separate Carrier Accounts and Enterprise Accounts sales operations.

Broadwing isn't shedding all things Corvis-related. Its chairman and CEO, David Huber, is staying put. But Broadwing will sell its OCS digital crossconnect switch business, which contributed about 2 percent of Broadwing's revenues last year -- and which came from Corvis, the company Huber founded and later guided to the merger with Broadwing.

Bannantine's departure and the pending sale of Broadwing's equipment group complete the unraveling of an optical technology portfolio that Huber set up along with his venture capital firm, Optical Capital Group (OCG). (See Huber's OCG on Ice .)

Jim Bannantine was the former CEO of Dorsal Networks, a company Corvis bought for more than $90 million. Dorsal's two largest shareholders when it was acquired were David Huber and OCG (see Corvis Dorsal Deal: A Huber Spin-In?).

Corvis, the equipment company, set off to become a service provider back in 2003, when it acquired Broadwing, its largest -- and one of its only -- customers (see Corvis & Broadwing: Together At Last). In September 2004, the Corvis name started to take a backseat as the company made strides to put its equipment business in perspective (see Corvis Splits for Broadwing).

These days, though, Broadwing appears to be more focused on providing services to enterprise and carrier customers. "Our decision to explore strategic alternatives for our OCS product is reflective of the change in our corporate focus," Huber said in a statement released Friday afternoon.

— Phil Harvey, News Editor, Light Reading

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LightBeating 12/5/2012 | 3:18:03 AM
re: Broadwing to Sell Corvis Business I've been posting here for some years, expressing my humble opinion on what Corvis/Broadwing should do. They never followed my advice, poor me... But those days are over!

I said, after they acquired Broadwing, they should get rid of the equipment biz.

I said at some point, who is this Bannantine guy with this insane salary and what is he still doing there?

I said, they should pay the PIPE in cash, stop dilution and restore confidence.

I never said it, but I always thought they were terrible at PR.

(actually, funny thing, I did send an email to IR complaining about the stock price. Guess what, I got a reply!! And THE NEXT DAY, they announced the cash payment!)

OK so what's next? Huber resigns and stays as Chairman? Spagnolo back? CFP ? Profits?

Is this a dream? Am I going to wake up and not see the stock reach $30 ?

Just let me sleep...

LB

optiplayer 12/5/2012 | 3:17:58 AM
re: Broadwing to Sell Corvis Business Does it really matter? The value of these businesses is virtually 0 whether they stand alone or are combined.

CogswellCogs 12/5/2012 | 3:17:58 AM
re: Broadwing to Sell Corvis Business Are they selling the entire Corvis Equipment Corporation or just the OCS product?

The article says that Broadwing is putting its Corvis equipment division up for sale so it can focus on being a service provider, but also that Broadwing will sell its OCS digital crossconnect switch business.

However, the press release says Broadwing Corporation (Nasdaq:BWNG - News) today announced that it intends to explore strategic alternatives for its Optical Convergence Switch (OCS) digital cross-connect product, including a potential sale of the product, not mentioning the rest of the equipment business.

paolo.franzoi 12/5/2012 | 3:17:57 AM
re: Broadwing to Sell Corvis Business
I got tree fiddy for Corvis!

Any other bidders?

seven
Belzebutt 12/5/2012 | 3:17:57 AM
re: Broadwing to Sell Corvis Business Remember back in the good old days when Corvis had its loyal following of Hubertologists, headed by what was his name again, Sparxe? "Dr. Huber is a great man, I met him personally and I have the utmost admiration for him".

These guys were saying that Corvis would take over the world, and put all "dinosaurs" out of business, with the all-optical-network taking off in a huge way with the killer app just around the corner.

The rest of us were told we had a personal grudge or something.

I guess now we know who was drinkig the Cool Aid :)
LightBeating 12/5/2012 | 3:17:57 AM
re: Broadwing to Sell Corvis Business Baron,

Of course it's not worth much. And of course the rest of the equipment biz is worth next to zero. Had they sold it a year and a half ago, say when there was still hope to get the GigBE contract, they would have gotten a much better price, and would have saved all the money that was since wasted in trying to keep that division alive.

But better late than sorry. To me it's a question of both sound management and perception. You don't keep a business that only contributes 1% of your revenues, but more than 20% of your loss. And investors now know exactly what they're investing in.

I know there are some on this board who still believe in the Corvis equipment business. My opinion has always been that they had some very good stuff, the OOO network and all that. But the market was such that they couldn't sell it to anyone for nearly three years. That's more than enough to kill the best product in the world.

I think buying Broadwing was, if not a brilliant move, at the very least a very good move. Had they not done it, they just wouldn't exist anymore, whereas now they are a nearly debt-free, nearly profitable carrier with nearly $1B revenue. Having gotten rid of their last non-profitable burden (and I'm not even talking about Bannantine here...) will just accelerate things now.

To one who still holds a significant number of shares, that is good news.

LB
Baron23 12/5/2012 | 3:17:57 AM
re: Broadwing to Sell Corvis Business I have to think that a four year old ASIC design is not worth a lot in itself. I would speculate that some of the optical patents that Corvis holds may be worth something under lincense or sale, but it doesn't seem like Huber is putting those cherries up for sale.

This doesn't seem to be terribly earth shattering news to me.

bitdropper 12/5/2012 | 3:17:56 AM
re: Broadwing to Sell Corvis Business Great point Belzebutt.

Somewhere Dave77777 is telling some homeless people gathered around him that if they'd just buy some more Corvis stock, everything will be fine.
Baron23 12/5/2012 | 3:17:55 AM
re: Broadwing to Sell Corvis Business LB - I think you may misunderstand me...I actually agree that since they are now in the carrier business, and since the backbone equipment business in general is DOA, they should divest it.

I just question, not state categorically but merely question, whether there is a buyer for this division at all. Again, four year old ASIC..would this be worth anything to anybody? Meanwhile, since they are now a carrier and we all seem to agree that it makes sense to divest the equipment business, I don't see where the good Dr is following this line of reasoning with respect to those items which may be worth something...namely the optical patents and IP. Licensed, sold, whatever...this seems to me to be the heart of the matter once you agree that divestiture of the equipment business makes sense.

Oh, with regard to Bezzlebutt's crowing about Corvis demise as an equipment manufacturer...we all know that he works (worked?) for Nortel (per his own posts). Perhaps he should look to his own backyard before he takes glee in another manf hard times. If it wasn't for wireless infrastructure, NT would be a lot worse off than their current not-terribly-enviable position.
moguefett 12/5/2012 | 3:17:55 AM
re: Broadwing to Sell Corvis Business bezelbuttcheecks...youre so cute! Anyone who was truly knowledgeable about the optical industry from a strictly technical standpoint was inclined or at least interested to invest in a company like corvis, period. There is no controversy about the statistical merits and capabilities of their product. Any one who wasn't interested or should i say didn't invest, was probably a competitor...like yourself.
Now there are many aspects of any buiseness to consider if youre going to put money into a company, especially ones future that you have absolutely no control over. Corvis was a successful failure. Way overvalued because primarily had never recieved a cent of revenue as a private company.
And please, plenty of the world settles for the crappiest products for so many reasons too long to list...the old ladies making chili downstairs and the kids crying so , you know the rest. The headline to this story is typical journalistic propaganda...a hope to spark readers. Difinitively , Broadwing is selling nothing related to its long haul and core swithing products...the basis for corvis very existance, and its still worth billions wether you pout or not.
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