Optical/IP Networks

Alcatel-Lucent Gets Tropical

Alcatel-Lucent (NYSE: ALU), one of the telecom industry's leading optical equipment vendors, is to expand its already significant arsenal with the acquisition of Canadian WDM vendor Tropic Networks Inc. , the company announced today. (See AlcaLu to Buy Tropic.)

The big question is: Why?

Here's the official line:

Tropic is well known to Alcatel-Lucent, which, having invested in the company in 2004, has been reselling the optical startup's technology to its telecom carrier customers and even integrating Tropic's technology into its platforms. (See Tropic Gets $33M From Alcatel, Others and Alcatel Shows Off Tropic Tech.)

But despite that relationship and more than $150 million in funding, Tropic has struggled to make its mark and reach profitability, and even engaged in a left-field financial arrangement with some oil companies in late 2005 to get its hands on some cash. (See Tropic Goes to the Well and Tropic Oils Up.)

With the coffers running dry again, Tropic's CEO Kevin Rankin says the company has been exploring various possibilities, including further fund-raising and acquisitions, for a while, something that Alcatel, as a partner and investor, would have been well aware of.

Tom Goodwin, head of marketing at Alcatel-Lucent's optical division, can't help with any details surrounding the deal. He says he can't comment on:

  • The price paid for Tropic
  • The number of staff moving to AlcaLu
  • The number of customer engagements Tropic has
  • Tropic's revenues; or
  • Whether other companies were competing to buy Tropic

What he can say, though, is that AlcaLu was "currently evaluating [its] portfolio, and the time was right" to make the acquisition. (See AlcaLu Makes Product Cuts .)

Goodwin notes that Tropic's Wavelength Tracker product gives the company the ability to "provision wavelengths easily and cleanly" and it allows for tracking wavelengths end-to-end. "The main strengths are in the simplification of the OA&M [operations, administration and maintenance] capabilities," he says.

Central to AlcaLu's interest in Tropic was what Goodwin calls a "hybrid optical/packet space." He says there's an increasing trend towards "Ethernet services being fed by WDM elements."

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