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tojofay
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tojofay,
User Rank: Light Sabre
4/28/2015 | 5:40:49 PM
Re: the metro market might be an exception
Wishful thiniking Mr. P. at your own peril.

Infinera and Transmode will merge on the network equipment palate like grav lax and a fine California sparkling wine!

 

Skal Dude
gin-drinker
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gin-drinker,
User Rank: Lightning
4/28/2015 | 7:43:32 AM
the metro market might be an exception
I think Mr Protiva has a good point - most of these M&A deals result in companies taking their eyes off the ball - the Nokia purchase of Alcatel will certainly be chaotic for customers over the next few years.

But I wonder if the metro DWDM market has a different dynamic in play.  This market has a large number of relatively small companies fighting for share, plus a few larger companies (Ciena, Cisco, Huawei) in there too.

In order to compete against those larger players, the smaller companies need to invest and innovate.  But they all have "sub-scale" R&D budgets - including Transmode and ADVA.

Transmode has done a great job in carving out a niche for itself and remaining profitable.  But IMHO, if it wants to grow its revenues and customer base to the next stage, it needs a big cash injection, and this is exactly what Infinera can bring.

Also, these are two pretty small companies - not like the stagnant bureaucracies of Nokia and Alcatel.  Yes, there will be some distraction and political fighting in the short term, but I would see the M&A chaos quickly being offset by the opportunity for greater investment, although I'm curious to see if Infinera will continue to push its PIC technology out to the metro edge.  For me PIC is not an obvious fit in such a low demand segment of the network.

It would not surprise me if, assuming the acquisition is approved, Infinera is happy to allow Transmode's architecture to dominate out at the edge, and use PIC technology to aggregate traffic into the core network.

 


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