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Ethernet equipment

Nokia Siemens to Acquire Atrica

The wait is over for Atrica Inc. , as Nokia Networks (NSN) announced this morning it's snapping up the carrier Ethernet specialist for an undisclosed sum.

Atrica's 180 employees and its executive team are expected to join NSN. The deal is expected to close before Jan. 1. (See NSN to Acquire Atrica.)

Last month, the Israeli news site Globes reported rumors of the matchup, assigning it a price tag of $100 million. NSN would not confirm that amount; Atrica officials were not immediately available for comment.

It's the first acquisition for Nokia Siemens, which had also been rumored to be on the hunt for Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA). (See Is Nokia Siemens Tailing Tellabs?)

For Atrica, the deal culminates a seven-year crusade in the name of carrier Ethernet.

Atrica picked up some early success with Orange (NYSE: FTE) and Deutsche Telekom AG (NYSE: DT). (See Atrica Plugs Into France Telecom, FT Heralds Ethernet Breakthrough, and Deutsche Telekom Tackles Ethernet.)

More recently, it's scored wins with carriers like Optimum Lightpath -- which doesn't have a network the size of France Telecom's but is a high-profile customer, given its intensive marketing push in the eastern United States. (See Atrica Finds Its Lightpath and HR Awards Top Ethernet Providers.)

But Atrica, with revenues recently estimated at $9 million to $10 million per quarter, never reached breakaway velocity for an IPO. Even a $100 million acquisition could be perceived as a letdown, considering Atrica raised $170 million in venture funding since being founded in 2000. (See Atrica Raises $28M More and Out of Atrica.)

NSN, meanwhile, is prizing the Tel Aviv-based engineering staff it's going to receive from Atrica. While NSN has its own Ethernet portfolio, it felt it needed some help when it comes to carrier-class gear.

"We're talking about a very immature market here. Carrier Ethernet is a market people have taken seriously for about two years," an NSN spokeswoman says. "Atrica has a product to complement ours. It just closed a gap in edge solutions."

Atrica sells carrier-class Ethernet gear, primarily for edge networks. Earlier this year, the company began offering customer-premises equipment as well. (See Atrica Intros Ethernet Demarc Device.)

— Craig Matsumoto, West Coast Editor, Light Reading

Kshitij_Kumar 12/5/2012 | 3:00:09 PM
re: Nokia Siemens to Acquire Atrica Well, congrats to my friends in Atrica!

I must say that the slowdown in startup acquisitions in the infrastructure space still shows no sign of letting up. Calix still hasn't gone IPO, Atrica seemed to be doing well, but I guess not well enough.

Compare that to Facebook and it's $15B acquisition and you wonder why any startup is still building infrastructure!

A $100M acquisition is a surprise - the VCs are probably cutting their losses. Unless, of course, they had a down round or two. Anybody know if they did a washout at any time?
Pete Baldwin 12/5/2012 | 3:00:06 PM
re: Nokia Siemens to Acquire Atrica Thanks for chiming in, Kshitij. Can't answer the washout question, but I do agree that the slowdown in equipment-vendor exits is going to last a while.

A lot of the more obvious candidates seem to lack the punch for an IPO -- you mentioned Calix; Atrica would fit in that groove; Force10 seems to have wound up there. The WiFi sector, too.

And the acquisition prospects for them are fewer. Ericsson and possibly NSN now have been beefing up, and that's the main deal driver in the sector, isn't it?

Well, OK, there was Cisco-Navini. Can't imagine Cisco would have wanted to buy Atrica, though.
NoCopper 12/5/2012 | 3:00:05 PM
re: Nokia Siemens to Acquire Atrica I wonder whether this aquisition will change the NSN CE strategy. NSN is very much in favour of PBB-TE and promoting it everywhere they can. Sometimes you might think they have even invented PBB-TE. Atrica does not quite fit into this PBB-TE story. Maybe NSN is only buying customer footprint? Maybe a shift in strategy? Maybe something else?
Pete Baldwin 12/5/2012 | 3:00:05 PM
re: Nokia Siemens to Acquire Atrica Taken at face value, NSN's comments suggest that the engineering team was as valuable as anything else.

Maybe the price was right for making a land grab on talent?
LeRoy 12/5/2012 | 3:00:04 PM
re: Nokia Siemens to Acquire Atrica I thought the Atrica technology was very similar to PBB-TE?? Connection oriented, NMS signaled, 50ms protection?

It will be interesting to see how it fits in with the other ethernet products at NSN.
rjmcmahon 12/5/2012 | 3:00:02 PM
re: Nokia Siemens to Acquire Atrica I doubt MSFT really believes Facebook is worth $15B. All they did was set the price expectation out of range for GOOG and Yahoo. It cost them chump change to this. Facebook founders aren't as bright as Mark Cuban who sold his entire company (broadcast.com) to a bunch of naive young ones running Yahoo at the time for a few billion. These guys will never be billionaires not to even mention cash flow positive.
Kshitij_Kumar 12/5/2012 | 3:00:02 PM
re: Nokia Siemens to Acquire Atrica Craig,

I think it's also the "HOLY-XXXX" valuations for web startups that are probably making the up-and-comers go where the money is. When Facebook gets a valuation of so many Billions of $$$, it makes the founders think hard about why they should focus on a sector that hasn't had too many home runs recently...

It's kinda like a self-fulfilling prophecy.

But isn't that often the best time to invest in something? When nobody else wants to do something in that sector....?

There's hope for the sector, I think.
rahat.hussain 12/5/2012 | 3:00:00 PM
re: Nokia Siemens to Acquire Atrica raunzer: Adva sells DWDM + ethernet, with most of the revenue coming from DWDM.

They have their original WDM products, the Movaz WDM line and the Covaro's etherjack if I recall.

Don't think they competed head-to-head against Atrica - but I may be wrong about their ethernet presence.

odo
raunzer 12/5/2012 | 3:00:00 PM
re: Nokia Siemens to Acquire Atrica Does anyone know if the products from atrica are comparable with advas products or don-Žt the fight against each other?

Thanks very much



Scorpion 12/5/2012 | 2:59:59 PM
re: Nokia Siemens to Acquire Atrica Sorry guys....but:
1.The sector is dead for startups!!! Thank you carriers, you made sure of thatGă¬
2.Talent at Atrica ??? ( from someone who really knows the company very well) it is at best an average company when it comes to talent. $100M for ~ 80 average engineers ( I know the company has 180 employees) ??? you can put together a significantly better team in the US ( Huge pull of talent is avail as result of the demise of the US telecom market), overall less expensive ( note that Israel is not cheap!)Gă¬.. who will not join, for lets say Gă¬.250,000 bonus? It is a very silly idea that they bought the company for the talent Gă¬. And if they did, they disserve what they get!
3.p.s. I am not a frustrated ex-employee Gă¬.:-)

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