Finisar Acquires Genoa
The deal would close the book on Demeter, the active-components startup purchased by Finisar in November 2000. By July, Finisar plans to close Demeter's facilities in El Monte, Calif., moving the Fabry-Perot and distributed feedback (DFB) laser operations north to Genoa's Fremont, Calif., offices.
A "handful" of Demeter employees would make the move to Fremont, but the remaining 40 will be laid off, says Finisar CFO Steve Workman. Genoa itself has roughly 40 employees, so Finisar's overall headcount would be nearly unchanged.
Genoa CEO Fariba Danesh will remain as Finisar's new COO if the sale is completed. She would replace Dick Woodrow, who is retiring (see Finisar Acquires Genoa).
Finisar is offering 7 million shares of common stock, making the deal worth roughly $6.6 million, based on the company's stock price of 94 cents at market close today. The deal is expected to close this month.
Genoa's linear optical amplifier is a variation on the idea of Semiconductor Optical Amplifiers. The LOA is a single-chip design that uses a VCSEL to linearize the amplifier output. If you picture the light signal traveling horizontally, the VCSELs would sit underneath the path of light, shining upward.
The technology was impressive enough to land Genoa on our 2001 Top 10 Private Companies list (see Genoa). It helped that the company had raised $95 million along the way, capped by a $75 million third round in 2001 (see Genoa Amps Up).
Among the fans of the LOA is NEC Corp. (Nasdaq: NIPNY), which used Genoa's chip in a 10-Gbit/s transponder module (see NEC Incorporates Genoa Amp). But overall, Genoa hasn't found great success with its amplifier, in part because the market has turned hostile to startups. Moreover, the company faces competition from other SOA vendors such as Kamelian Ltd.
Finisar is interested in the LOA as a product, but the deal offered other pieces as well, CFO Steve Workman says.
For one, Genoa's manufacturing capability is more involved than Demeter's -- hence, the moving of Demeter's products to the Genoa fab. Finisar benefits by getting a bit more vertical integration, as Genoa excels in process steps such as epitaxial growth, Workman says.
Genoa also brings VCSEL technology, something Finisar had begun shopping for. The VCSELs will probably be used inside other products, although Finisar isn't ruling out the possibility of selling VCSELs on the merchant market.
As icing on the cake, Finisar knew of Woodrow's pending retirement and was in the market for a new COO.
The LOA will live on as a Finisar product line, but it's going to receive some tweaking. Specifically, Finisar sees potential for enhancing the device with some of the passive components acquired from New Focus Inc. (Nasdaq: NUFO) in May 2002. Finisar has already tried out some possibilities in the lab, Workman says.
— Craig Matsumoto, Senior Editor, Light Reading