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Optical/IP

Will Tellabs Take Polaris?

Word on the street is that Polaris Networks is on the verge of being acquired, according to several sources in the optical networking biz.

So far, the only potential acquirer's name to pop up is Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA).

Polaris, which makes a metro switch combining digital crossconnect and Sonet ADM functionality, might make a nice complement to Tellabs' recent buys. Tellabs has beefed up its access portfolio with the purchase of Advanced Fiber Communications and Vinci Systems, a developer of optical networking terminals for fiber-to-the-home (FTTH) access systems (see Tellabs & AFC: Together at Last!, Polaris Lifts Off, and Tellabs Vacuums Up Vinci).

Tellabs spokesperson Ariana Nikitas would not comment on the rumors. “All I can say is that we can not discuss any type of rumor about acquisitions,” she said when contacted today.

Speculation is that Polaris, which reportedly just landed deals with two bit players, has a large contract in the works that is conditional upon a buyout. Possibilities include AT&T Corp. (NYSE: T), Sprint Corp. (NYSE: FON), and Verizon Communications Inc. (NYSE: VZ), each of which has reportedly trialed Polaris’s switches.

Polaris president and CEO, Surya Panditi, confirmed that the company has recently landed some deals, but would not go into details until after the deals are announced, possibly as early as next week. While he wouldn't comment on the acquisition rumor, he did say, "We're in some discussions regarding the company, but I can't comment on the nature of those discussions or who they're with at this point." Polaris, founded in June 2000, develops optical transport switching systems for metro core networks. The capacity of its OMX switch starts at 240 Gbit/s and scales to 2 Tbit/s, and it handles circuits in smaller increments than core switches -- VT1.5 (1.7 Mbit/s) vs. STS1 (51.84 Mbit/s).

The company has received $77 million in funding to date from Redpoint Ventures, Venrock Associates, Storm Ventures, Advanced Technology Ventures (ATV), Firsthand Capital Management Inc., Granite Global Ventures, KTB Venture Capital, Pac-Link Management Corp., Presidio Venture Partners LLC, Riverside Management Group Inc., Western Technology Investment, and WK Technology (see Polaris Platform Scores With VCs).

This is not the first time Polaris has been rumored to be on the block. Back in 2002, the company was reportedly looking for a buyer in order to score a big deal with AT&T (see Who Will Pick Up Polaris? ).

— Chris Somerville, Senior Editor, Next-Generation Services

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OSXman 12/5/2012 | 3:29:39 AM
re: Will Tellabs Take Polaris? Anyone out there have any thoughts on whether the OMX is gaining any traction?
stuartb 12/5/2012 | 3:29:28 AM
re: Will Tellabs Take Polaris? The OMX has little-to-no meaningful customer traction. The only reason Tellabs might consider buying Polaris is to take out a potential competitive threat.
ekimyelims 12/5/2012 | 3:29:27 AM
re: Will Tellabs Take Polaris? Tellabs is cutting half the staff in europe. Over 200 jobs gone. Add this with the recent buys of AFC, Vinci and possibly Polaris and it looks like Tellabs will exit the international business.

What do you think?
ekimyelims 12/5/2012 | 3:29:27 AM
re: Will Tellabs Take Polaris? Tellabs announces 200 lay offs in europe. Check the local press in denmark and finland. It is a massacre. Top managers all gone and a hachet man came in with an ax.
jlcsig 12/5/2012 | 3:29:27 AM
re: Will Tellabs Take Polaris? how rececntly did these layoff occur, and in what functional areas (mfg, r&d, sales)?

i thought the 8600 product was being developed in europe; could this suggest cancellation of this product?
ThouShaltNotJudge 12/5/2012 | 3:29:27 AM
re: Will Tellabs Take Polaris? Sounds reasonable; this is what happened when the Ocular box loomed as the greatest threat (though it seems the Ocular group has since been effectively disbanded and the product moth-balled).

The headline: "Will Tellabs Take Polaris," might be better restated as "Will Tellabs Rescue Kao, Tolerate Panditi, and Mercifully Allow the VC's to Recover Some Portion of Their Dough." However, just why Tellabs might perceive Polaris as a threat is mystifying.

TSNJ
ekimyelims 12/5/2012 | 3:29:26 AM
re: Will Tellabs Take Polaris? 8600 is designed in finland and over 100 jobs are to be cut there. R & d, product management, sales, admin all are getting cuts. Same thing in danmark.

Word is the 8600 will be dropped or left to the 8800 people in San Jose.

Strange thing is Tellabs has only released it publicly in local finland and danmark papers. Nothing in the U. S. They want to keep it quiet.
Light-bulb 12/5/2012 | 3:29:25 AM
re: Will Tellabs Take Polaris? Well I don't want to be too negative here, because I know how Tellabs advertises HEAVILY on light-reading so I'll tread carefully. However I really can't let this go.
Tellabs management is horrible. Now, I know I know, how would this guy know? Well, it all started back in 99' a small company... Ocular life was bliss, the state of Virginia loved us and we were hot. We also had a product that worked. (ERR... stretching a bit)
Now, God bless Kennedy and Miller for taking a product and getting a fit somewhere. (Because at the time the product was going to TRY to compete with the ADM market which was growing crowded) Anyway they decided to throw more granularity into the switch and start grooming VT's at a pure OC level (7 Protected OC48s) Well the result? We started competing with Tellabs. Qwest loved us, wanted to throw money down our shorts and well the rest is acquisition history... however that's where this all begins.
You see after being on board Tellabs it was quickly discovered that WE were not wanted either by the Sales team (Who wanted to sell the Titans) (That is an aptly named product I tell you) or by mid-level management. In fact it quicky drove or forced nearly all the Ocular people away within 6 months, keeping the same slug culture in Tellabs and repulsing any thought of change.
So, why the long story? Because being informed is half the battle and if Polaris employees are reading this I hope you take it to mind. Before it happens start posting for a new job, because Tellabs is only looking to take you off the block because it doesn't understand how to deal with competition. The product will never see the light of day. Don't trust me, go read for yourself, see how many acquisitions Tellabs have completed and their success. Horrible, just like the management.
Advice to upper Polaris Execs...
IF you are wanting this to succeed, and are not trying to pull out for $$, here are the steps to follow:
#1 - Forward Vest 2 years for options for ALL employees. Design an aggressive program to help retain Polaris Engineers, and existing sales team. (THIS IS CRITICAL - because they'll put up with a lot of crap while the transistion occurs)
#2 - Create a parallel sales force (Existing polaris sales team) for Polaris equipment. (Compete with Tellabs products! Else Tellabs you'll rinse & repeat with the next competitor!)
#3 - Allow Real integration and information exchange between the 5500 team and the new Polaris team (Let's face it there can be technology integration between the two, perhaps using new Polaris technology in the switch or line bays)
#4 - Praise your SE force and keep them focused on the Polaris product. They will soon be exposed to 20+ year old technology and that can be daunting.
#5 - REWARD your sales team! I mean REWARD them! They took your half-baked product to the customers and sold it well enough to have acquisition talks.

Cheers,
OpticOm 12/5/2012 | 3:29:25 AM
re: Will Tellabs Take Polaris? The story you told us reminds me vividly about another acquisition made in hell: Alantec being acquired by FORE.
Absolutely identical nightmare...
ThouShaltNotJudge 12/5/2012 | 3:29:24 AM
re: Will Tellabs Take Polaris? btw, I don't know much about Anda: Does anyone know who are their customers? More importantly, would any top-tier carrier (i.e., Sprint or Verizon) consider Anda a legitimate/suitable partner for Polaris?

TSNJ
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