Finisar Buys (and Saves) AIFOtec
Finisar says it will hire AIFOtec's 30-plus employees and will rename the acquired entity Finisar Europe. The transaction was completed on February 1, 2002.
AIFOtec has found a way to make fiber grating laser arrays designed for CWDM (coarse wavelength-division multiplexing) and DWDM (dense WDM) devices (see Is Aifotec in a Jam?). The technology promises to reduce laser costs considerably -- and that's a big deal for metro equipment, where the cost of lasers is often a large part of the overall system cost.
Last year, AIFOtec unloaded its other product line -- which included a 1x2 optical switch -- on a Pennsylvania-based interconnect product maker called FCI Fiber Optics (see Startup Moves Fibers, not Mountains).
Finisar has acquired several companies in the CWDM space in the past couple of years, but it is also facing pressure from investors regarding how much cash it is spending on its business.
In Aug. 2000, Finisar acquired Sensors Unlimited for about $663.7 million in stock, plus $16.4 million in seller costs (see Finisar Boosts Its Telecom Prospects). In Nov. 2000, Finisar agreed to acquire: Transwave Fiber for $79.7 million in stock; Shomiti Systems for $32.85 million; and Demeter Technologies, which makes single, long-wavelength lasers for CWDM and DWDM applications, for about $145.7 million in stock (see Finisar Acquires Shomiti).
In March 2001, Finisar acquired Medusa Technologies, an independent testing organization, for $7.2 million in cash.
Finisar has also missed some deals, and investors are concerned with the company's cash management.
In June 2001, Finisar withdrew a $300 million offer to buy Marlow Industries Inc., a pullout that cost Finisar $1.7 million, according to SEC filings (see Finisar Ends Merger Plans).
"[Finisar] is burning between $20 and $25 million a quarter, partly because they're bringing their Malaysian manufacturing facility online," says Max Schuetz, an analyst at Credit Suisse First Boston. "Also, their Demeter and Sensors Unlimited acquisitions gave them two semiconductor fabrication facilities that they have to keep up and running, which are under-utilized right now."
Finisar was on the verge of buying Tsunami Optics and even supplied the company with a bridge loan, when a few large shareholders told the company that if they did any more dilutive acquisitions, the shareholders would dump the company's stock, says one source close to Finisar's largest shareholders. Stratos Lightwave LLC (Nasdaq: STLW) ended up agreeing to buy Tsumani in an all-stock transaction, and Stratos will likely be paying back Finisar's loan (see Stratos Buys Tsunami).
Finisar, however, probably won't be in hot water for buying AIFOtec. But AIFOtec's creditors will get the shaft, as Finisar is acquiring assets only -- no liabilities -- according to Steve Workman, Finisar's CFO. Officials at AIFOtec declined to comment.
Calls to Tsunami Optics were not returned.
— Phil Harvey, Senior Editor, and Peter Heywood, Founding Editor, Light Reading