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Lockheed Spins Off Transmitter Startup

Light Reading
News Analysis
Light Reading
11/30/2000

There was a time when most advances in telecom technology emanated from establishments developing military communications equipment. Nowadays, however, these outfits are spawning a steady stream of startups.

The latest one to emerge is TeraConnect Inc. (no Website), which was spun out of Lockheed Sanders Inc. earlier this month (see Lockheed Martin Spins Out).

TeraConnect isn’t exactly forthcoming about its plans. "We're working with vendors to give them something that will allow them to move more data at high speeds, within, without, and beyond their networks," waffles Glenn Thoren, TeraConnect's vice president of business development. "It has a broad applicability," he adds, unhelpfully.

Luckily, the civilians backing the scheme are a little looser lipped. “TeraConnect [will] fill a significant void in the high-speed transmission segment,” says Phil Cooper, managing director of Goldman Sachs's Private Equity Group, in a press release.

Another clue is that Thoren used to head up Sanders’ Microelectronics Center, a foundry for light-emitting materials like gallium arsenide and indium phosphide.

Light Reading’s first impression was that TeraConnect is getting into the same line of business as outfits like Agility Communications Inc.: Aiming to make tunable lasers and then integrate them with modulators and amplifiers on the same piece of substrate (see Agility Launches First Product).

Feedback (see next page) now suggests that this guess isn't so far out. According to the anonymous source, TeraConnect is making integrated lasers, detectors and parallel optical fibers. That probably means that it's working with vertical-cavity surface-emitting lasers (VCSELs). These can easily be produced in arrays, spaced 250 micrometers apart to line up with the fibers in a fiber ribbon (see Laser Blazers).

Whatever it is, it must be significant for TeraConnect to get the sort of funding it's gotten. It's raised a $40 million first round from some blue-chip backers -- Kodiak Venture Partners and Spectrum Equity Investors, in addition to Goldman Sachs.

TeraConnect isn’t the first startup to be spun out of Lockheed Martin Corp. (NYSE:LMT). Centerpoint Broadband Technologies Inc. preceded it (see Battle Begins Between FDM Twins). Similarly, Radiant Photonics Inc. (formerly Radiant Research) and Kent Optronics Inc. keep afloat financially thanks to military R&D contracts (see Former Geyser CEO Finds New Home and Kent Optronics).

-- Pauline Rigby, senior editor, Light Reading http://www.lightreading.com

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