Headcount: Play Merger Mania

Forget Disney and Comcast Corp. (see Comcast Makes Offer for Disney). Headcount would like to see Ciena Corp. (Nasdaq: CIEN) and Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) combine and then, together, go after Advanced Fibre Communications Inc. (AFC) (Nasdaq: AFCI) to create an access-to-core powerhouse.

Look at the history, and it all makes sense. Ciena and Tellabs tried to combine for a $7.1 billion merger back in 1998, but the deal fell apart. These days, both companies are in the mindset of getting into new and different markets, while becoming "end-to-end" networking companies. And both companies have talked with AFC in months past, according to Light Reading reports and Headcount sources (see Tellabs Angling for Access – and AFC).

Headcount thinks the three-way combo AFC, Ciena, and Tellabs would be almost free from product overlap. It would also have several top-flight managers, including Krish Prabhu from Tellabs; John Schofield and Jim Sackman from AFC; and maybe even someone from Ciena, too.

"The M&A market is getting to be like the Major League Baseball owner's meeting," says one financial analyst. "Everybody's talking to everybody else, and just about anything is possible."

But forget what we'd find amusing: What combo would you suggest to turn the industry on its ear? (See Introducing... Normenscatoni! ) Sound off on the boards below. While you're fastening the chin strap to your thinking caps, Headcount will review the latest hirings and firings of interest in the telecom world.

  • Speaking of Ciena... The company is said to be cutting staff in its San Jose office, according to two sources close to the company. Exact numbers are hard to come by, given how recent the cuts. But two other sources say the company is prepping for a large internal reorganization, set to take place within a month. The company itself hasn't been shy about acknowledging that it will need to make changes in order to improve its chances of profitability. In this particular case, Ciena did not respond to a request for comment.

  • Chorum Technologies Inc. is finally winding down its operations, according to two sources close to the company. The company, which once employed more than 800 people and raised more than $213 million in venture capital funding, dropped out of the telecom side of the components biz early last year (see I Want You!). The board will distribute some money back to the company's investors and is mulling now whether to sell the company as a whole or in pieces.

  • Xtera Communications Inc. has hired Jon Hopper as its new CEO. Hopper was the former senior VP of sales at Photon Dynamics, a post he had held since July 2001. In the 90s, Hopper held chief executive posts at several companies including Dynamotion, IRSI, and Xtreme Devices. In the 60s, he appeared in the film Easy Rider. No wait, that was a different Hopper.

  • Passavé Technologies Inc. (now spelled très français, apparently) says it will double its staff size, to 50. The chip maker says it has 20 customers, but won't disclose names. Equipment makers noticed the company recently when it nabbed a place an upcoming NTT Group (NYSE: NTT) fiber-to-the-premises buildout (see Chip Startup Claims NTT Coup).

  • MegaSense Inc. has shut its doors and cut its final 22 employees, but the technology lives on, chairman and CEO Vladimir Vaganov says. The company gave up on optical components last year to make components for the handset and video game markets. Nintendo Co. Ltd. (Tokyo: 7974) and Nokia Corp. (NYSE: NOK) liked the idea, Vaganov says, but investors balked at the high-volume, low-margin business plan. Vaganov, meanwhile, is hitting the funding market again on behalf of Siantis, a new company pursuing handset technology.

  • Quick hits: Kotura Inc. is the name of the new company that came from the Arroyo Optics and Lightcross merger (see Arroyo, Lightcross to Merge)... Chuck Harris (not to be confused with Chuck Norris), formerly of Siemens AG (NYSE: SI; Frankfurt: SIE), Tachion, and Gluon, has landed at CopperCom in a product marketing role... Force10 Networks Inc. just hired Ralph Harms as its CFO. Harms was involved in at least three IPOs in recent years (Autonomy Corp., Flycast Networks, and ESS Technology), in case you're wondering what Force10's exit strategy might be.

    That's all for now. Until next time, keep those news tips coming to [email protected]. And don't forget to put your merger suggestions on the boards. The more far out, the better. We'll toss some Light Reading schwag to the authors of our favorite posts.

    — Phil Harvey, News Editor, and Craig Matsumoto, Senior Editor, Light Reading

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    lpeterson 12/5/2012 | 2:26:55 AM
    re: Headcount: Play Merger Mania I heard that Wave7 is in trouble. They could not get into any MSOs or Telecom operators. Their products are not standard, all preparatory. Cash will eventually dry out. Any inside information?
    lpeterson 12/5/2012 | 2:26:53 AM
    re: Headcount: Play Merger Mania Sorry, typo, proprietary
    chasing the carrot 12/5/2012 | 2:26:53 AM
    re: Headcount: Play Merger Mania It's best to be preparatoried and ready for anything at all times.
    SolarSailor 12/5/2012 | 2:26:52 AM
    re: Headcount: Play Merger Mania ... word on the street is that Ciena is attempting to move lots of the San Jose jobs over to China.

    Apparently much of the San Jose positions were held by "foreign talent" anyway, so, this is justified as a next logical step.

    Considering its going to take them close to 2 years to gear things up in China, won't be long before we see the last few handful of talented people abandoning ship (there are lots of Ciena resume floating around already).

    And with Gary's poor quarter showing, and hardly any potential for upside in the next quarter, there's every sign this company is in serious poo.
    uno04 12/5/2012 | 2:26:50 AM
    re: Headcount: Play Merger Mania
    >>Their products are not standard, all preparatory. Cash will eventually dry out. Any inside information?

    For that matter all EPON vendor's equipments are all propreitary. The APON vendors are compliant with FSAN but none of the EPON vendors have EFM compliant equipments deployed.

    As far as running out of cash, that must be true of other players in the PON space too as we don't see any huge orders for any one vendor.

    Don't you think if the big guys like Cisco, Nortel see huge potential in these markets, we would have seen some M&A activity?
    mtd 12/5/2012 | 2:26:49 AM
    re: Headcount: Play Merger Mania
    Another casuality at ALLOPTIC - last time I visited their website (~2 weeks), the name "Keith xxxx" was under VP of Sales and now, that name is gone - it is now "Jack xxxx". Before Keith, Al Purdy was thier VP of Sales who is since then moved to Wave7.
    jr2 12/5/2012 | 2:26:49 AM
    re: Headcount: Play Merger Mania

    Alloptic has OEM agreement with Ericsson and C-COR and so, one of those guys may still acquire ALLOPTIC. It may not be big bucks as ALLOPTIC sales have'nt picked up yet, it may be just for IP.

    whyiswhy 12/5/2012 | 2:26:42 AM
    re: Headcount: Play Merger Mania My prediction.
    Let's see.
    gps 12/5/2012 | 2:26:39 AM
    re: Headcount: Play Merger Mania "For that matter all EPON vendor's equipments are all propreitary. The APON vendors are compliant with FSAN but none of the EPON vendors have EFM compliant equipments deployed."

    There is a forthcoming IEEE standard which will address E-PON. Should be ratified later this year.

    The undisputed biggest investment in FTTx is physical plant. It is also the investment which you get to depreciate for 10-20 yrs. Apon, Bpon, and Epon all operate over the same basic physical footprint. Thus, if you buy one vendor's widget and they go belly-up, there are a dozen other vendors who can operate over the same infrastructure.

    For Wave7, you deploy a fiber plant that doesn't look quite like PON or quite like point-to-point. So, you are digging trenches and installing cable based upon a design that is unique to one vendor. That requires a whole lot of faith.
    atmguy 12/5/2012 | 2:26:36 AM
    re: Headcount: Play Merger Mania

    According to the articles in the PON forum, there are new vendors that have products deployed namely AFL Telecommunications, Flexlight and Entrisphere. Anyone know amything about these companies? Thanks.
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