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Marconi Components: Up For Sale

Light Reading
News Analysis
Light Reading
9/13/2001

Marconi Optical Components, the six-month old division of Marconi Corp. PLC (Nasdaq/London: MONI), will be turning up at the ECOC exhibition in Amsterdam next month with a double agenda. One, to sell new products, and two, to sell the company.

The division's future was placed in question after Marconi announced the results of an "operations review" a few weeks ago. It said it would concentrate on what it terms "core businesses" and its components division isn't considered core (see - Heads Roll at Marconi).

Marconi undertook the review following a disastrous profits warning, which saw its stock price crash by over 50 percent in a single day (see Marconi Stock Tanks). After announcing the results of the review and warning of further losses, Marconi's shareprice slumped even lower and now stands at 35 pence ($0.51), compared to £12 ($17.50) a year ago.

Marconi plans to reduce its debts by selling off its non-core assets, which include a service provider venture called Ipsaris, as well as the components division. It hopes to raise £500 million ($730 million) in this way by the end of its financial year, in March 2002.

With Marconi's share price in the toilet, the idea of spinning out the components division as a separate company will not be viable for the foreseeable future. Instead, Marconi is in active discussions with unnamed potential "partners", David Parker, CEO of Marconi Optical Components told Light Reading today.

"These will either be synergistic partners, who can bring complimentary technologies into the division, and/or a financial injection," he said.

So, what would a potential partner or buyer get its hands on? An announcement today describes the portfolio of products being developed by the company, which will be exhibited for the first time at ECOC (see Marconi Touts Products, Appointment).

The showpieces of the demonstration will be a 10 Gbit/s tunable transmitter, and a 40 Gbit/s fixed-wavelength transmitter. Other products, included to round out the portfolio, are 10 and 40 Gbit/s modulators and traditional erbium-doped fiber amplifiers. Many of the components are already shipping to selected customers, says Parker.

According to Parker, the transmitter products are based on an integration technology that can be scaled easily from 10 to 40 Gbit/s. Many other technologies don't scale, he notes.

Marconi's technology, which has the rather wild name "Terabit Engine", involves both monolithic and hybrid integration. The monolithic platform is based on gallium arsenide, and can incorporate functions such as modulators, variable optical attenuators (VOAs) and novel photon detectors. Lasers, which are made out of indium phosphide, are optimized separately.

Inside the 10 Gbit/s transmitter on display at ECOC, Marconi has put a laser, a wavelength locker, a modulator and what it calls a "two-photon detector" -- which it describes as a very low-loss tap required for optical feedback -- on a single chip. It has also developed transmitters that contain all the above, plus a variable optical attenuator for adjusting the output power.

The big advantage of integrating components is that optical losses are much lower than they would be if using discrete components, says Carla Feldman, Marconi's executive VP of sales and marketing in North America, whose appointment was also announced today. The transmitter on display at ECOC tunes across the entire C-band, and has an output power of 2 milliWatts -- equivalent to using a laser with two or three times the output power and sending the light through a separate lithium niobate modulator.

The device is comparable to the tunable transmitter unveiled recently by Agility Communications Inc., which has the same output power (see Agility Packs Three Into One). However, Agility's transmitter operates at 2.5, not 10 Gbit/s. It also incorporates an integrated semiconductor optical amplifier to boost its output power, whereas Marconi's device doesn't.

Marconi Optical Components is planning to reveal the technology behind its tunable laser early next year. "We have a whole series of tunable laser technologies that will enhance manufacturability" says Parker. That will bring the cost down to a point where the tunable transmitters can penetrate volume applications, he contends.

ECOC show attendees are also invited to watch videos of the automated manufacturing plant that Marconi Optical Components brought on line in the recent months. "The message is: 'We're a grown up company'," says Parker.

— Pauline Rigby, Senior Editor, Light Reading
http://www.lightreading.com

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