Intel Scoops Up New Focus Laser Unit

Intel Corp. (Nasdaq: INTC) announced today after the markets closed that it has bought New Focus Inc.'s (Nasdaq: NUFO) tunable laser business and technology for about $50 million in cash.

The deal emphasizes New Focus's desire to move away from the long-haul equipment space, which it had been targeting with its earlier tunable laser products. It also shows that Intel is getting more serious about being a player in the optical components space. The company has been very active on the acquisition front, scooping up struggling components outfits and investing in others.

As part of the deal, about 40 New Focus employees will join Intel. Intel, in return, will license a completely packaged tunable laser back to New Focus, which will then be able to explore putting it to use in other markets, such as in test and measurement equipment.

Previously, Intel had acquired LightLogic in April 2001 for about $400 million (see Intel's 10-Gig Shopping Spree). The company also bought GIGA A/S in March 2000 for about $1.25 billion; and its April 2001 acquisitions of Cognet for $183 million and nSerial for $54 million were added to the company's 1999 acquisition of Level One Communications for $2.7 billion to form the bulk of its optical products group (OPG) (see Intel Still Seeking Startups).

New Focus, on the other hand, is heading in a different direction. In April, it announced it was closing a large facility in China, selling its passive optical components product line, and firing 350 people (see New Focus Gets New Focus). Later that month, Finisar Corp. (Nasdaq: FNSR) agreed to buy New Focus's passive optical component product line for about $12.75 million.

"When we entered into this market two and a half years ago, a lot of our focus was on the long-haul equipment segment…which will probably be substantially depressed for a number of years," says Bill Potts, chief financial officer for New Focus. "Even though we'd come up with a next-generation design, there was still an issue with packaging and manufacturing and we didn't want to undertake that ourselves."

New Focus had not been making any revenues from its network tunable laser business to date, Potts says. After selling the technology to Intel, New Focus will continue to build components and tools for the semiconductor industry, biotechnology development, metrology, and spectroscopy.

New Focus shares closed up $0.14 (5%) today to $3.03. Intel ended the day down $0.20 (0.68%) to $29.39.

— Phil Harvey, Senior Editor, Light Reading
http://www.lightreading.com