Avanex Adds to Arsenal
Comment (2)Avanex is offering 1.24 million shares of stock for the assets. As part of the deal, Vitesse would work with Avanex to develop future transponder products, and Avanex would agree to buy up to $2 million in Vitesse products -- probably optoelectronic chips -- during the next three years.
A Vitesse spokeswoman says half of the division's 62 employees will be going to Avanex. Another 16 will be on board temporarily as part of the transition team. Avanex officials did not return calls for comment.
The deal follows Avanex's acquisitions of Alcatel Optronics and part of Corning Inc.'s (NYSE: GLW) photonics business (see Avanex Closes Acquisitions). While Avanex picked up a wealth of componentry through those deals, the Vitesse assets might help bolster the company's standing in 10-Gbit/s modules.
The Optical Products Division started life as Versatile Optical Networks Inc., acquired by Vitesse in 2001 for roughly $150 million in stock. Vitesse closed the division recently, taking a $17.3 million write-off and putting the assets on the block (see Vitesse Narrows Q3 Loss and Headcount: Nice Job).
By acquiring Versatile, Vitesse was taking a shot at expanding into photonics. Vitesse, like most of its competition, had mounted a strategy to provide all the major chips on a line card, and the company wanted to extend that reach to include some of the optics as well. The resulting VIT10 line of 10-Gbit/s transponders made its debut at OFC in 2002 (see Vitesse Acquires Versatile and Vitesse Enters Optical).
Versatile had also developed an all-optical switching fabric, but it seems less likely that Avanex would be interested in that product. In a not-really-related related turn of events, Vitesse completed the acquisition of transceiver vendor Multilink Technology Corp. (Nasdaq: MLTC) last night (see Vitesse Completes Multilink Buy).
— Craig Matsumoto, Senior Editor, Light Reading
