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Optical/IP

Zaffire May Have a Buyer

Zaffire, the metropolitan optical networking startup that has gone through more management shifts than your local McDonalds franchise, may soon be scooped up by a major public networking company.

The suitors? Possibly Ciena Corp. (Nasdaq: CIEN) or Marconi Communications PLC (Nasdaq/London: MONI), according to sources. The price range? $200 million to $300 million.

Ciena and Marconi officials had no comment. Zaffire had not returned calls at press time.

Zaffire has struggled lately, as sales efforts have faltered and the company has been forced to lay off staff and reorganize (see Zaffire Fires 20% of Sales Team and Zaffire Gets Zapped). The company has also gone through a power struggle and shuffled chief executives (see Zaffire Keeps It in the Family , Zaffire Names New CEO, Christ Comes to Zaffire, and Zaffire Zaps Marketing VP ).

At least one venture capitalist commenting on a potential deal said that a price range of $250 million was appropriate -- maybe even a little high -- for the company in the current market. Other struggling optical networking startups have met worse fates (see Mayan Buys Ticker Symbol and Atmosphere Comes Back to Earth). But if the company is sold for roughly $250 million, it's not likely to make anybody rich. Most optical networking startups funded last year received valuations over $500 million.

Other factors may be driving the sale of Zaffire. Vinod Khosla, the Kleiner Perkins Caufield & Byers VC who funded Zaffire, is now on sabbatical and may be looking to close the loop on his optical portfolio. Another investor, the publicly held optical incubator MRV Communications Inc. (Nasdaq: MRVC), might be looking to raise cash from the transaction.

Although Zaffire officials have denied the company is for sale in the past (see Zaffire: 'We're not for Sale'), Silicon Valley sources said the company has been actively shopped around.

Even though it has had trouble gaining significant customer accounts, Zaffire's DWDM (dense wavelength-division multiplexing) equipment might be attractive to some large companies looking to plug holes in their optical portfolios (see Zaffire Announces DWDM for Metro Networks). Although Ciena recently purchased Cyras Inc. to make a move into metropolitan networks, Cyras is focused on Sonet technology, rather than on DWDM. The recent success of DWDM metro player ONI Systems Inc. (Nasdaq: ONIS) and aggressive moves into the metro DWDM market by Cisco may give competitors reason to boost their metro DWDM technology offerings.

-- R. Scott Raynovich, Executive Editor, Light Reading
http://www.lightreading.com
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soothaandi 12/4/2012 | 8:26:40 PM
re: Zaffire May Have a Buyer Scott,

Do you have a current list of Metro DWDM players out there? My list is as follows:

1. ONI Systems
2. Cisco - thru Pirelli and Qeyton
3. Sorrento Networks
4. LuxN
5. Nortel - via Cambrian
6. Lucent - at least they have been claiming to have something
7. Astral Pointe? - combination MSPP & DWDM?
8. Zaffire
9. ADVA - mostly enterprise

Any more? Looks like Metro DWDM is going to be big this year, you guys should be running articles on their strengths and weaknesses and comparative values.

Think about it.
jghutchison 12/4/2012 | 8:26:37 PM
re: Zaffire May Have a Buyer There are three players in the metro DWDM space, Nortel, Ciena, and ONIS in order or market share. Plus there are a dozen wannabes including Zaffire.

Jack Hutchison
Zaffer for life 12/4/2012 | 8:26:36 PM
re: Zaffire May Have a Buyer "The suitors? Possibly Ciena Corp. (Nasdaq: CIEN - message board) or Marconi Communications PLC (Nasdaq/London: MONI - message board), according to sources. The price range? $200 million to $300 million."

Gosh... this is interesting.... why you were at it you should have included, Cisco, ONI, Nortel, McDonalds, JC Penney, Sears, Ford Motor... who cares... its just one more rumor that Light Reading and its hack writers (not journalists.. paleeeese) like to spread.

Let's see...

"Ciena and Marconi officials had no comment. Zaffire had not returned calls at press time."

..And why would they? Oh, I see because you guys are so responsible and so Factual.... NOT.

And please... don't kid yourself... you don't have Presses! There is no "Press Time" you are nothing but a shoddy, cheap e-Rumor Mill who continues to feed off the difficulties of our industry. You are not journalists... we know it, maybe you should stop the denial you live under.

You guys had no facts for this article...why would you print it? Oh we know why, you guys are such sleeze bags you would sell you mother this Mother's Day for the sake of Advertising!

You're no better than two junior high school girls passing notes in study hall... Go home, be proud of your hard earned College Degrees ( big assumption here) and all you are able to do with them.

This is getting old... have some pride... establish some principles and print the facts... we need information that enables our industry to advance... not denegrate our intelligence and bring down the hard work of thousands of individuals who have commited themselves to making our lives, our families, co-workers and customers lives better.

abarbier 12/4/2012 | 8:26:36 PM
re: Zaffire May Have a Buyer "2. Cisco - thru Pirelli and Qeyton"

and ONS15540
Run2theBathroom 12/4/2012 | 8:26:35 PM
re: Zaffire May Have a Buyer Gotta agree. Called my buddies at GS. This 2-bit reporter couldn't be farther off. The rumoured deal size is 2 to 3x what he writes, and the ID of the suitors is way-off. What are this guy's sources? He must have no links into Wall Street.

You want to predict some M&A fireworks? Get the flight plans of Sycamore and Corvis' BD guys. And I hear that Cisco is close to a deal, but not in the metro (big software play?) And Juniper is now back looking around after RBAK fell through. And ONI is once again looking to do a double or trifecta of acquisitions.

These guys are Light Clueless!
gardner 12/4/2012 | 8:26:34 PM
re: Zaffire May Have a Buyer This is getting old... have some pride... establish some principles and print the facts... we need information that enables our industry to advance...
---------------------------
Nurse, we have a true believer here. Get the thorazine. ;-)



not denegrate our intelligence and bring down the hard work of thousands of individuals who have commited themselves to making
our lives, our families, co-workers and customers lives better.
----------------------
Translation: print whatever the PR flaks at my startup say is true. My CEO said it at the company meeting, I believe it, and that settles it. Besides, I really need those options so I can retire at 30.
Sheesh!

You wanna know what is getting old? Every time some 25 year old Bill Gates wannabe waltzes in here and accuses LR of being corrupt because they don't print every lie the PR flaks flush into the trade press. Let's face it folks, a lot of people are going to suffer because of the drunken sailor antics of the Venture Capital clowns who backed every wacko business plan that could be scribbled on the back of an envelope. That suffering isn't going to be eased one iota if LR caves and starts printing the PR lies you wanna hear. The folks who manage to get themselves into a jam always blame the messenger instead of the guy that lead them down the primrose path with promises of quick wealth.


Techhead 12/4/2012 | 8:26:33 PM
re: Zaffire May Have a Buyer As you wrote, Fibr has the customers, great products, and two qtrs of 50% growth and comming up a 17% increase. They have a hot product and now Teramanager with the all optical switch. Gilder just mentioned them in the new report. At this cheap price it is truely a steal.
portnoy22 12/4/2012 | 8:26:33 PM
re: Zaffire May Have a Buyer The intriguing thing here is that ONI can dominate in the metro with a marginal product...proprietary oam&p protocol, no in-band management, lousy density.....not to mention the arrogant business practices we've all heard about.(kinda strange that a company can become arrogant with less than 20 customers)
Not sure if Zaffire is the answer, but somebody's gonna figure out the metro space and knock turtle-neck boy on the side of the head.
nightreading 12/4/2012 | 8:26:32 PM
re: Zaffire May Have a Buyer Rumour has it that $375Mil cash with full acceleration is on the table. Also that there are numerous suitors at present. Have heard names like Ericcson and Nortel. My impression is that neither Ciena nor Marconi have laid anything out yet.

Pretty impressive that Zaffire is in the company of so many other promising metro players, yet still has multiple options.
lectronix 12/4/2012 | 8:26:32 PM
re: Zaffire May Have a Buyer Although sometimes LR seems to be biased towards it's bigger advertisers (Sycamore, etc.), to its credit, I have noticed that a lot of the so-called e-rumors ended up being e-facts. There is tremendous room for improvement, but the site is free, damn it, and the bills are effectively paid by the industry. This should be kept in mind before swallowing anything that LR offers up.

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