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Intel Scoops Up New Focus Laser Unit

Light Reading
News Analysis
Light Reading
5/23/2002

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

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OptixCal
OptixCal
12/4/2012 | 10:20:39 PM
re: Intel Scoops Up New Focus Laser Unit
You don't suppose Intel is seeing this optical components downturn (cliff diving) as a distant star, do you? Maybe they suck up Agere, Nortel's optical components unit, JDSU, Avanex and others and become the optical component business equivalent of Microsoft?
strands555
strands555
12/4/2012 | 10:20:38 PM
re: Intel Scoops Up New Focus Laser Unit
According to a Gartner-Dataquest research note released yesterday, Intel rose to the #2 position in combined communications semiconductors and optical components revenues. Excluding optical components, Intel took the number 1 position for the first time.

I was surprised/shocked to read this. Only time will tell if these stats are just an artifact of being better able to hang on and persist in the current environment compared to most companies, or is really indicative of a trend toward leading in these areas. Which do you think it is?
chromatic aberration
chromatic aberration
12/4/2012 | 10:20:23 PM
re: Intel Scoops Up New Focus Laser Unit
Yes, to some extent it is the ability to hang on through bad times. But let's probe a little deeper:

1. Intel is an engineering driven company - BS from MBAs does not govern the company.

2. The company leads the world in terms of actual silicon technology. Why then does the leadership in the component space surprise anyone ?

The comparison to Microsoft appalls me. There is no comparison, except for the fact that both companies lead the market in their respective spheres.

chips
chips
12/4/2012 | 10:20:17 PM
re: Intel Scoops Up New Focus Laser Unit
Chromatic Aberration is right in pointing out the strengths of an engineering driven company. They have the advantage in correctly assessing which new idea will work best. If what companies like New Focus need is guidance on how to take a gleam in a designer's eye and turn it into a leading edge product, then by all means let the engineers lead.
Myself, however, I'd like a crafty marketeer on my company's executive team as well, so that we only spend time on the new ideas that somebody is willing to buy at a price greater than what it costs us to make them. I've seen too many great ideas come to nought when the corporate leadership consists solely of wide-eyed engineers with neither the training nor the talent to access the market. There is too much faith in the concept of "build it and they will come (and buy)".

Intel has both sets of talents on their roster. I will be keeping an eye on what they do with this technology.
showmethephotons
showmethephotons
12/4/2012 | 10:03:50 PM
re: Intel Scoops Up New Focus Laser Unit
...and become the business equivalent of Polaroid...
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