Would Cisco Buy Brightlink?
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
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?