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Would Cisco Buy Brightlink?

Light Reading
News Analysis
Light Reading
11/14/2001

BrightLink Networks Inc. may be the latest addition to the game bag of Cisco Systems Inc. (Nasdaq: CSCO).

That's the rumor on the Street, but, so far, it appears the negotiations are preliminary, if indeed they're taking place at all.

BrightLink isn't owning up. "We're not ready to make an announcement," says CEO Paul Schaller, quickly adding, "I don't know where this came from."

Cisco, as usual, says it won't comment on rumor and speculation.

The sale, if it comes to fruition, wouldn't be a surprise. BrightLink recently cut most of its sales force and acquired a new CEO, in what industry observers have taken to be preparation for a sale (see BrightLink Cuts to the Bone).

For its part, Cisco could benefit greatly from the deal. For one thing, BrightLink may be going cheap. As previously reported in Light Reading, the company's post-money valuation (the value assigned after a company has received funds) approached $500 million in 2000, but harsh economic times drove the company to accept pre-money valuation (value before investment) in the $60 million range during its fundraising round this summer.

Cisco could also stand to gain technologically. BrightLink has one of the only switches on the market that supports Sonet STS1 (51.8 Mbit/s) grooming (see BrightLink's Prospects Brighten ). Grooming is key because it speeds up the provisioning process and reduces the amount of equipment carriers need to get it done (see Brightlink Works on Its Grooming).

Grooming's especially coveted in switches that, like Brightlink's, are designed to work at the "edge of the core" in metro networks, aggregating traffic and breaking it onto Sonet links at increments down to STS1.

To date, the market leader in grooming has been Ciena Corp. (Nasdaq: CIEN) with its CoreDirector switch. But BrightLink even has an advantage there -- namely, a distributed architecture with the Cretaceous name of Hypertorus Mesh that allows carriers to scale BrightLink switches simply by installing additional boxes, instead of upgrading existing hardware.

Several other vendors also are in various stages of developing grooming switches, including Corvis Corp. (Nasdaq: CORV) and Sycamore Networks Inc. (Nasdaq: SCMR). For awhile Cisco was one of them, but that apparently came to an end when the vendor abandoned its Monterey routing project earlier this year (see Cisco Kills Monterey Router).

Analysts seem surprised and intrigued by the possibility of the combination. "Hypertorus Mesh would go great with Cisco's technology base," says Rick Schafer of CIBC World Markets.

Brightlink also might benefit from being acquired, some say. "It's tough being a standalone optical switch provider," says Scott Clavenna, president of PointEast Research LLC and director of research at Light Reading.

Clavenna says BrightLink is in that stage of its development when trials are underway and deals are in the works but revenue hasn't ramped. Even in better economic times, startups in this "timing gap" may be attracted to being part of a larger company instead of going it alone, he maintains.

— Mary Jander, Senior Editor, Light Reading
http://www.lightreading.com

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optigirl
optigirl
12/4/2012 | 7:34:28 PM
re: Would Cisco Buy Brightlink?
This would make for an interesting acquisition as Cisco needs a compelling product offering and there doesn't seem to be much worth buying on the market today. However, which carriers are likely to buy this product? Ciena seems to be dominant in this space and I can't see Cisco knocking them out for any real reason. Cisco has been known to finance its customers and that might open some doors for them but long-haul is a different business for them, really.

The RBOCs seem to be the next frontier for cross connects and rumor has it that Tellabs has really screwed up on its products and that Ciena would sell their collective left arms to get into these accounts. Cisco's 454 is smokin right now but would that be enough to get them traction in the switching side of the house?

Just musing.....

PS, Mary: Why call your co-worker for a quote? Does he have some inside dirt on the company or is this one of the companies that he consults for?
poster
poster
12/4/2012 | 7:34:27 PM
re: Would Cisco Buy Brightlink?
I'm no analyst but it seems this would be yet another bad move for csco. I thought they were intent buying solid companies with customer traction, revenues and somewhat proven technology? haven't they learned anything? this seems like another blue-light special. why buy a startup with no customers and most likely not a very strong product in an attempt to penetrate further the brutal carrier market that they've had limited success with so far? and a cross-connect as well? my guess is this would be a technology purchase and would require significant development into product - something they do not do well anymore.

just think if they hadn't bought pirelli, they could just pick up ciena now and have the whole optical enchilada - STS-1 cc, metro, long-haul, and ULH transport, and paying customers. what a mistake that was.




stavvmc
stavvmc
12/4/2012 | 7:34:26 PM
re: Would Cisco Buy Brightlink?
Brightlink has obviously been on the block since its layoffs in October. I am sure they would like potential buyers to believe Cisco is looking at them. Brightlink's problems have been too visible for Cisco to buy them even if the technology fits.
Light_Path
Light_Path
12/4/2012 | 7:34:26 PM
re: Would Cisco Buy Brightlink?
Lightreading,

This is not news, this a rumor started by someone who likes to play "what if" games. Cisco will not buy Brightlink, there is no point in it.

The carrier market is weak now so why would Cisco aquire a company that is struggling in that market? Long Haul and ELH/ULH are slow also and Cisco is about to release a home grown LH/ELH DWDM platform that will compete against Ciena and Lucent.

I can play the "what if" game too. What if Cisco bought ONI? ONI is in San Jose across the street from Cisco and ONI dominates the IOF market that Cisco is going to compete in. What if, what if????

LP
flanker
flanker
12/4/2012 | 7:34:21 PM
re: Would Cisco Buy Brightlink?
...Brightlink's problems have been too visible for Cisco to buy them even if the technology fits...

CSCO doesnt need to spend several hundred million to pick up an OC 1 card and the switch intelligence thereof.

They are better off modularizing the 15454 and the existing optical product line. Besides, a fully fitted Brightlink product with cards > STS 1 would eat into 15454 sales.


knave
knave
12/4/2012 | 7:34:21 PM
re: Would Cisco Buy Brightlink?
dear flanker, how is life from the rear?
If anyone actually knew anything about the admittedly bloody carrier market, and has some REAL LIFE experience they would conclude that the tradional suppliers - Alcatel, Lucent, Tellabs, Fuji have left the RBOC's stranded technologically. cisco has filled a niche for a while, but " rack and stack" is getting long in the tooth. Grooming switches are hot and if they scale people will be buying as soon as soon as the dust settles. P.S. real buyers are looking for more options that the oldest OXC from CIENA.......
sntwk
sntwk
12/4/2012 | 7:34:18 PM
re: Would Cisco Buy Brightlink?
It is very simple. BrightLink fabric is the brightest out there. All the claims of other big time vendors have been primarily marketing hype and for a while carriers were also not clear as to what they wanted. Now a clear trend is emerging and the trend is towards switched networks.

BrightLink architecture is unique and I am sure will offer some smart integration possibilities for the buyer both at software and hardware level. Cisco's recent acquisition of a GE chip startup (Raza foundries company?) + BrightLink fabric will provide one such possibility.

I think with Brightlink Fabric, it is not only what the fabric today but how you can design new products with that fabric that will be key to the buyer.

millerlite
millerlite
12/4/2012 | 7:34:18 PM
re: Would Cisco Buy Brightlink?
Knave,
can you compare Brightlink's box with Core-Director, SN16000....?
optical_leaders
optical_leaders
12/4/2012 | 7:34:18 PM
re: Would Cisco Buy Brightlink?
This will as big a mistake as the Monterry acquisition - it will continue to show that in terms of large scale optical networking Cisco do not cut it.

"Cisco is about to release a home grown LH/ELH DWDM platform that will compete against Ciena and Lucent."

The "pirelli" platform which is Cisco's "new" LH/ULH platform is in no way a valid competitor of the Lucent or Ciena platforms.

Cisco should stick to the router market.



Litewave
Litewave
12/4/2012 | 7:34:18 PM
re: Would Cisco Buy Brightlink?
Doesn't the BrightLink switch have the same limited port granularity as the Tellium switch? ie. down to OC48 only?

Their "distributed fabric" architecture is interesting, it reminds me of parallel computing architectures which are by no means non-blocking.

Is it truly non-blocking?
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