Motorola to Buy Quantum Bridge

...for peanuts? Companies decline to put a figure on the cash transaction

March 30, 2004

2 Min Read
Motorola to Buy Quantum Bridge

Motorola Inc. (NYSE: MOT) announced this morning that it's reached an agreement with Quantum Bridge Communications Inc. to buy the passive optical networking startup for an undisclosed cash sum (see Motorola Acquires Quantum Bridge).

"Undisclosed" in this case probably means an embarrassingly small amount of money -- or, at least, a far cry from the valuations that Quantum Bridge had in mind way back in December 2000, when it filed for an IPO (see Quantum Bridge Aims for IPO). The IPO never happened, and Quantum Bridge, like many other startups, has been through a succession of layoffs since (see Quantum Bridge Withdraws IPO and PON Believers Hang Tough).

From Motorola's point of view, acquiring Quantum Bridge fits into an overall strategy of becoming a bigger player in broadband access markets. About a year ago, it acquired a VDSL equipment manufacturer, Next Level Communications, giving it a story for upgrading telco copper to handle broadband (see Motorola Buys Rest of Next Level, Moto's Next Level Offer to Expire, and Motorola Extends Next Level Offer).

Shortly after this, Quantum Bridge and Motorola announced that they had teamed up to target fiber-to-the-home (FTTH) projects (see Motorola, Quantum Bridge Team Up). Since then, the duo have won a number of contracts (see Motorola, Quantum Bridge Win FTTP Deal, NAED Picks Motorola, Quantum for FTTP, and Motorola, Quantum Bridge Do FTTP).

"We were part of the strategy, so there isn't a lot of redundancy in what they do and what we do," says Jeff Gwynne, senior VP of marketing and business development at Quantum Bridge. "It's a great fit with our telco presence."

Quantum Bridge will be absorbed into Motorola's Broadband Communications Sector (BCS) division. This division is already a leading player in other segments of the broadband services market, according to Motorola. This includes video headends, video set-top boxes, multiservice transport infrastructure, and cable modems. Motorola's broadband strategy also includes the manufacture of PON chips (see Motorola Joins BPON Craze).

Quantum Bridge and Motorola are still discussing how many of the startup's 70 staff will be transferred to Motorola's BCS, according to Gwynne.

Gwynne declines to say how much funding Quantum Bridge received in total, noting that recent rounds have gone unannounced. Four years ago, the company wasn't so bashful. It was basking in a third round of $102 million, which brought total funding to $124 million (see Quantum Bridge Raises $102 Million).

At the time, investors included Atlas Venture, BCI Partners Inc., Comcast Interactive Capital, Dain Rauscher Wessels, First Union Capital Partners, JP Morgan Capital Corp., KMC Investment Partners, Lazard Technology Partners, Morgan Stanley Dean Witter Private Equity, New Enterprise Associates (NEA), Pequot Capital Management Inc., and Texas Pacific Group.

— Peter Heywood, Founding Editor, Light Reading

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