Optical components

An Optical Merger!

4:00 PM -- No guts.

That's what Georgio Anania told me was the problem with the optical components industry -- no one had the cajones to pull of the kind of big merger the sector needs.

A couple of years later, you've got Finisar Corp. (Nasdaq: FNSR) and Optium Corp. (Nasdaq: OPTM) growing a pair, so to speak. They're pooling resources to create what might be the largest company in the optical components space, with $554 million in revenues for the past 12 months. (See Finisar/Optium Merge.)

JDSU (Nasdaq: JDSU; Toronto: JDU), for its third quarter, reported optical communications revenues of $136.1 million. Multiplied by four, that's a run rate of $544.4 million -- just shy of the new Finisar/Optium (which plans to use the Finisar name).

Avanex Corp. (Nasdaq: AVNX) and Bookham Inc. (Nasdaq: BKHM; London: BHM) tried and failed -- a deal that Anania never confirmed, by the way. (See Will Avanex Hook Bookham?.) So, kudos to Finisar and Optium for getting something done.

But part of the theory about the industry benefiting from a big merger was that such a deal would erase some of the oversupply -- that is, cause layoffs and shutdowns. I'm not sure Finisar and Optium are talking about that. Their deal does help limit the sheer number of suppliers -- something companies like Cisco Systems Inc. (Nasdaq: CSCO) have wanted to see for some time -- so it at least puts the new Finisar in a leader's position and probably puts the squeeze on competitors.

— Craig Matsumoto, West Coast Editor, Light Reading

Pete Baldwin 12/5/2012 | 3:40:45 PM
re: An Optical Merger! Forgot about the finisar/Bookham idea, although that apparently didn't get far.

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