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Zhone's losses are down to 5 million a quarter
now. If they shut down most of tellium, that
cash could last for a long while. Its more
likely that Zhone will use it as leverage for
more and bigger deals though.
At Ascend, Mory and co. bought many companies, few of which held together or generated value following their acquisition. Even Cascade, the jewel that caused Lucent to buy Ascend, was hounded into disfunction following the acquisition. The key Cascade leaders left Ascend/Cascade. The collapse of the core networking group was in the cards even prior to Lucent's acquisition.
Do Tellium investors have a better chance of seeing their investment yield returns following the Zhone merger? I doubt it. This type of deal making is destroying confidence in the American stock market.
I would love to see an American company revitalize the telecom sector. I don't think it will come from the short-sited self-centered Mr. Ejebat and his cronies.
Normally a profitable public company with lots of cash buys a private company with no cash.
What we have here is a lossy private company with no cash buying a public company with lots of it.
Whats the incentive to sell ?
The incentive is criminal.
The first thing that will happen is that most people at Tellium will lose their jobs. Zhone usually sweeps away any remnants of development and engineering as soon as the acquisition legalities are done. Zhone does little or no development work, buys other peoples work and soon claims that they "Zhone" are the "last mile access experts". Zhone for all practical purposes cannot even properly sustain the product lines that they already own. This is once again a case of Fat Cat Mory and his side kick wanting to get fatter. He really does not know much more about technology than I as an American, about his Farsi language. Zhone is like a company of vultures who basically want to cash in other peoples work while showing them pink slips. Yes every company is all about money, and the bottom line. But most "for profit" companies also have ethics. Not here. Zhone and its CEOs should be audited and investigated BIG TIME. This is my humble opinion.
Acquire and Fire - This is the Zhone formula for success.
Seems like the days of zero-cost buyout are behind us. What we are in now is negative-price buyouts.
Does this mean option-holders in the acquired company have to pay the acquirer ? For the privilige of being acquired ?
Take my options ! I want to get off !!
While Mory may be the ultimate deal maker (he snookered Dan Smith on CSCC) the word vison can never be used in conjunction with Jeanette. The words should never even be used in the same sentence.
The word clueless would be a far more appropriate adjective for her, but I believe that adjective is taken....
Tellium, on the other hand, needs rescuing. They occupy a very specific niche in the 'optical' networking world, and while I still believe that there's value in that niche, that value is not enough for them to go it alone. If Tellium is augmented by gear that then provides an end-to-end solution (access/metro/long haul), then some GMPLS capabilities might give this new combo some powerful capabilities, making it a nice product for network's like, say XO.
However, I have no idea if the Zhone people have the vision or capability to make something like that happen. And, even this rosy scenario is an extreme long shot.
Problem is, you have to have high service churn to justify the cost of the Tellium switch - otherwise "Bob the Switch Tech" is way cheaper. This applies ever more so to GMPLS.
Even if you take into account the mesh network architecture savings (which requires dense connectivity - something XO does not have), the cost of the switches NEVER pay back. The lines just don't cross.
As cool as the Tellium box is, there is just no market that can be seen until at least 2006 - and only then when network growth returns to a level a couple of orders of magnitude above that of today.
So....this is just a cash grab. Look for the Tellium IP to be piece parted out and a few more homes to go up for sale in New Jersey.