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DWDM

Infinera Gets Corvis (Sort Of)

As if defunct Corvis weren't beaten down enough, it's now lost out to Infinera Corp. (Nasdaq: INFN)

Broadwing Corp. (Nasdaq: BWNG), the U.S. carrier acquired by a sinking Corvis in 2003, today announced it's chosen Infinera's DTN, a long-haul WDM system, for future optical buildouts.

Moreover, Corvis's all-optical switch has landed in Infinera's hands. Infinera is taking over Corvis's old product, the CorWave OCS switch, just to maintain the installed base for Broadwing -- and is picking up Corvis patents including the all-optical switch.

"We licensed the intellectual property rights to it," says Dave Welch, Infinera chief strategy officer. He stresses, though, that Infinera doesn't plan to revive CorWave. Rather, Broadwing suggested this maintenance deal as an adjustment to its purchase of Infinera DTNs.

Broadwing has been trying to sell the product line for more than a year. (See Broadwing to Sell Corvis Business.) As part of the deal -- terms of which weren't disclosed -- Infinera picked up 40 Broadwing employees located in Columbia, Md.

Irony abounds. For those who don't remember, Corvis was the bubble-era company preaching all-optical switching for then plentiful long-haul projects. Infinera is the opposite: The company says its strength lies in avoiding all-optical switching, instead providing a compact box that switches traffic after converting it to electrical form, then back to optical. (See Infinera Declares WDM War.)

Infinera, which has collected quite a few customers in recent months, isn't using this win to rub it in against all-optical switching. Well, not any more than usual, anyway.

"Broadwing historically has been aggressive pursuing technology," Welch says. "They're not going to let a religious vision taint [a decision on] what's correct for them to deploy."

Infinera isn't planning any Corvis revival. The plan is to sell linecards and service only to Broadwing, Welch says, with future Broadwing buildouts relying on Infinera's DTN instead.

Separately, Infinera has licensed from Broadwing some of Corvis's Raman amplification technology, which is useful for linking long spans in a network. "I could see that adding some Raman to Infinera gets them longer spans with fewer intermediate inline EDFA [erbium-doped fiber amplifier] sites, which can reduce network cost," says Scott Clavenna, chief analyst with Heavy Reading.

To many, Corvis was the pinnacle of bubble-era excess. The company, founded by Ciena Corp. (NYSE: CIEN) founder David Huber, went public in 2000 and rose to a valuation of $37 billion despite having no revenues. (See Avici and Corvis Make Stunning Debuts, Corvis Dorsal Deal: A Huber Spin-In?, A Survey of the Corvis Food Chain, and The David Huber Game.)

Along the way, Huber amassed some notable conflicts of interest, as his venture firm was investing in Corvis's component suppliers. Later, Corvis acquired undersea-optics firm Dorsal, in which Corvis and Huber both held stakes.

With the bubble deflating, large carriers canceled ambitious optical plans, leaving Corvis starving in the dust. Corvis eventually took over Broadwing, its largest customer, installing Huber as CEO. Huber stepped down in February 2006, causing Broadwing's stock to soar. (See Corvis & Broadwing: Together At Last and Broadwing Soars as Huber Goes.)

— Craig Matsumoto, Senior Editor, Light Reading

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NEsteves 12/5/2012 | 3:48:17 AM
re: Infinera Gets Corvis (Sort Of) First we had lead tele companies mergers (AT&T, SBC, MCI...), after that suppliers mergers (Alcatel, Lucent, Ericsson, Nokia..) now its time to knowledge merger...

voipexpat 12/5/2012 | 3:48:14 AM
re: Infinera Gets Corvis (Sort Of) I am interpreting this deal as Broadwing providing patents/licenses to Infinera in exchange for some quantity of DTN. Is that correct?

If so, how much did Infinera "pay"?

Just asking...

googol_byte 12/5/2012 | 3:48:13 AM
re: Infinera Gets Corvis (Sort Of) >
> If so, how much did Infinera "pay"?
>

They probably didn't "pay" anything. This is likely a new twist on the old practice of having a service provider adopt a new technology in exchange for pre-IPO shares in the equipment vendor. You may remember that Broadwing, Williams, and Qwest all had pre-IPO shares in Corvis, and "rewarded" Corvis with equipment contracts. In fact, Broadwing made more on the stock than they ever spent on Corvis equipment.

So Broadwing gets to write off some headcount, they separate themselves from the equipment business, and they likely get pre-IPO shares in a potential high-flyer. Sounds like a good deal.
pancheetoh 12/5/2012 | 3:48:10 AM
re: Infinera Gets Corvis (Sort Of) You have proven your point one too many times: Huber's hubris was a fiasco. Corvis no longer exists, Huber is playing golf and only owns a tiny fraction of the company, and you seem to be the only one still dancing on the grave. Congrats. You were RIGHT all along. Time to move on.

Broadwing is now a plain carrier. A pretty decent one by most measures: service offerings, balance sheet, customer book size, network footprint, salesforce, etc... Its largest shareholder is Fidelity. Maybe you can write something looking into the future. Patting yourself in the back has gotten old.
Pete Baldwin 12/5/2012 | 3:48:09 AM
re: Infinera Gets Corvis (Sort Of) Who's proving points? One of the most fabled bubble companies moves into what's likely its final resting place ... that's news. We're gonna cover that.
Pete Baldwin 12/5/2012 | 3:48:08 AM
re: Infinera Gets Corvis (Sort Of) We mostly talk about Infinera's potential to stomp Ciena, but does Infinera's presence also mean that all-optical switches like Calient's and LambdaOptical's get pushed even further out to the future?

(I don't think Broadwing's case counts as evidence, because Corvis' days were numbered there. But it makes a good starting point for the discussion.)
pancheetoh 12/5/2012 | 3:48:08 AM
re: Infinera Gets Corvis (Sort Of) Craig this event is clearly newsworthy. The spin, whoever, is the same old, same old you have shown whenever Corvis/Broadwing is brought up ("defunct", "sinking", "old products", "preach", "pinnacle of bubble-era excess", "dust", "fabled bubble company", etc...). Time to realize Broadwing is a new company pretty far into its final purging of Huber and his hubris. You were right about Corvis' demise (old news) but you might be wrong about Broadwing (new news).
fiber_r_us 12/5/2012 | 3:48:07 AM
re: Infinera Gets Corvis (Sort Of) Not to mention that LR keeps pumpin' Infinera like they are going to rule the world. Fact is, as many have already noted, Infinera is dying and looking for a way out. No vendor is going to buy them and save them, so they can only try for an IPO.

The Infinera-Broadwing deal practically amounts to Infinera paying Broadwing to use Infinera equipment. By Infinera's own admission, the Corvis technology has little value, so why pick it and the employees up and increase their (already absurdly high) burn rate? And no mention of the size of the deal? How much gear was sold? Over what time frame?

Just another marginal deal with minimal upside for Infinera. I guess they are hoping to con enough brokerages to pull-off an IPO. Be interesting to see if anyone bites. Dumber things have certainly happened in this space.

I will certainly give Infinera credit when it comes to marketing prowess and amazing ability to hype their position. They may actually pull it off just through sheer will-power and BS. But, I just don't see how their numbers add-up to being a real business that would withstand any resonably critcal look at their books.
ninjaturtle 12/5/2012 | 3:48:02 AM
re: Infinera Gets Corvis (Sort Of) I think you are the one full of BS. All your rambling is totally without any merit or facts. Infinera does not plug themselves. These are press releases that are being issued. You are thinking of Sycamore back in 2000. The "sizzle no steak" company. Don't speak on subjects unless you have facts and can back them up. In this case you have no idea what you are talking about.
pancheetoh 12/5/2012 | 3:48:01 AM
re: Infinera Gets Corvis (Sort Of) Please take a look at Telephony's piece. Informative, objective, adds a wealth of info and analysis. They even took the time to call Broadwing's CIO to figure out what is going on. No need to regurgitate 5 yr old info, laced with innuendos about Huber's hubris, and the already old "I told you so" attitude of your opinion piece.

http://telephonyonline.com/hom...
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