Ghost of Photonetics Rises

The remains of a company once bought for $1.05 billion live on in a little French startup called Kylia

December 15, 2004

2 Min Read
Ghost of Photonetics Rises

A little French optical components startup called Kylia popped its head above the parapet this morning to announce the signing of a North American distributor, Bizzen (see Kylia Signs North American Distributor).

Kylia, it turns out, embodies the remains (and five of the original staff) of Photonetics, a French startup bought by NetTest in the "bubble" year 2000.

GN Nettest, as it was known at the time, paid the equivalent of $1.05 billion for Photonetics -- $735 million in cash and $315 million in GN Nettest shares. Photonetics' shareholders also stood to get an extra $100 million in shares if GN Nettest's IPO went off as planned in 2001 (see GN Nettest Acquires Photonetics ).

At the time, Photonetics had sales of $18 million a year, but great things were expected for the future. Jay Liebowitz, an analyst with RHK Inc, was quoted in a Light Reading article about the acquisition saying that the optical components market would be "much greater" than $23 billion in 2003, his previous forecast (see Great Dane Aims for Best in Show).

Of course, neither the IPO nor the market growth came to pass (to put it mildly) and Nettest pretty soon got embroiled in legal battles with New Focus (now part of Bookham Inc. (Nasdaq: BKHM; London: BHM)) over patents covering its core technology -- tunable lasers used in gear to measure and control the power of light in Wavelength Division Multiplexing (WDM) systems. A settlement was reached in early 2003 (see New Focus, Photonetics Clash and New Focus Settles Patent Suit).

Nettest appears to have followed up on this by supporting a management buyout that created Kylia last year, by providing the initial funding of €120,000 ($160,000). Kylia inherited its existing customers, which will probably bring in about €1 million in sales in its first year of business, according to Frederic Verluise, its CEO.

Kylia has 10 staff and is profitable, Verluise adds. Signing a distributor agreement with Bizzen aims to increase sales in North America. It follows a similar deal between Nettest and Bizzen (see NetTest Signs West Coast Distributor).

— Peter Heywood, Founding Editor, Light Reading

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