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Optical/IP

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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jcrawshaw 12/5/2012 | 3:10:54 PM
re: Alcatel-Lucent Gets Tropical Lucent had been reselling Movaz ROADMs but when Lucent was acquired by Alcatel, Movaz sold itself to ADVA. I guess the Tropic deal means ADVA's ROADM sales through the Alcatel-Lucent channel are likely to drop off quicker than previously anticipated.
digits 12/5/2012 | 3:10:53 PM
re: Alcatel-Lucent Gets Tropical Word in the market is that Comcast is a key Tropic customer that ALcatel-Lucent fancied having in the bag.
If the price wasn't outrageous, this could be quite a canny move for AlcaLu in terms of an MSO base, as well as the future potential in upcoming Tier 1 business.
whome? 12/5/2012 | 3:10:47 PM
re: Alcatel-Lucent Gets Tropical
Well they had $150Meg in and the reports say that it sold for around $30Meg so I'm think probably not...........
canadian 12/5/2012 | 3:10:47 PM
re: Alcatel-Lucent Gets Tropical So, what was this company finally acquired for? Did the folks there make any money?
canadian 12/5/2012 | 3:10:43 PM
re: Alcatel-Lucent Gets Tropical BTW, where did you see the $30M number? I only saw a reference to th $33M invested in 2004... I don't know what they were actually sold for!

"Well they had $150Meg in and the reports say that it sold for around $30Meg so I'm think probably not..........."
canadian 12/5/2012 | 3:10:43 PM
re: Alcatel-Lucent Gets Tropical Right, it would appear that they wouldn't have made anything. Of course, often, such deals have a "core team" clause, which allows the core team members to still make some money even though the deal wouldn't appear to leave anything for them... It's just to make sure the team stays on...
whome? 12/5/2012 | 3:10:42 PM
re: Alcatel-Lucent Gets Tropical
The "believed" sell price has been in a couple of articles including the second page of the LR article that started this discussion list:

"Another source says Alcatel-Lucent has landed Tropic relatively cheaply too, with talk of a deal valued at around the $30 million mark or less, giving the vendor giant some decent ammunition for the forthcoming RFP as well as a better hand in the MSO market"
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