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Optical components

Big Bear Put to Sleep

With winter coming, Big Bear Networks is headed for the big sleep.

No, we're not talking about the "hibernation" strategy that was popular during the downturn. (See Bear Market Inspires Hibernation.) Big Bear is closing up shop after selling its assets in two deals.

"Big Bear's gone," says Paul Celentano, the company's vice president of finance. "There are three employees, and I'm one of them, paying the bills."

Finisar Corp. (Nasdaq: FNSR) announced today that it's buying Big Bear's 10- and 40-Gbit/s transponder assets for $1.9 million in cash. Big Bear's chip business was sold to a yet undisclosed chip company, Trail says.

Some of Big Bear's 50 employees are staying with their respective products. About one-third were offered jobs with the chip company, and just less than one-third are going to Finisar, says John Trail, a former Big Bear product manager The rest are being laid off.

Celentano adds that some of Big Bear's semiconductor team is vacillating over whether to start their own company rather than accept their job offers. "They're a very talented group," he says.

Big Bear raised $78 million in three rounds between 2000 and 2003. The company was founded to build 40-Gbit/s optical transponders but retreated to the 10-Gbit/s market as the downturn worsened, focusing on dispersion compensation as its technological advantage. Big Bear was targeting carrier networks but recently got into the data center market as well, with a part for the 10GBASE-LRM Ethernet standard. (See Big Bear Hugs $40M, Big Bear Cuddles Up With $18M, Big Bear Comes Out of the Woods, and Big Bear Delivers 10GBASE-LRM Modules.)

Most of the products, including the Kodiak 40-Gbit/s transponder, were ambitiously high-end, but they worked, Celentano laments. "I'll never quite understand how we didn't get a better valuation."

Big Bear never disclosed its customers but did win a supplier award from (Nasdaq: CSCO). Big Bear was getting revenues from 12 different customers, Finisar CEO Jerry Rawls told analysts on a conference call today.

Finisar's purchase continues its march into 10-Gbit/s optical transceivers, which included the acquisition of Infineon Technologies AG's (NYSE/Frankfurt: IFX) fiber optics business in January. (See Finisar Buys a Bit of Infineon.)

On the call, Rawls described Big Bear as a "small but very wise investment." He described the purchase as a chance to expand Finisar's 10-Gbit/s offerings and get in on the ground floor of 40-Gbit/s, all "without spending the huge sums required for pioneering R&D."

Finisar's stock was down 14 cents (7%) at $1.81 in early after-hours trading today -- although that may have been a reaction to Finisar's second-quarter earnings release rather than the Big Bear buy.

Finisar reached a non-GAAP profit -- $850,000, which rounds off to zero cents per share -- for the first time since April 2001. When restructuring charges were included, though, Finisar found itself with losses of $15.8 million, or 5 cents per share, on revenues of $86.6 million. (See Finisar Posts Q2.)

— Craig Matsumoto, Senior Editor, Light Reading

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oemarket_com 12/5/2012 | 4:05:33 AM
re: Big Bear Put to Sleep Starting up a company based on unproved technolgy takes double risks: risk in R&D on the technology and risk in predicting the market and finding the customers. It is just too hard to achieve all of those tasks.
Stevery 12/5/2012 | 2:52:17 AM
re: Big Bear Put to Sleep but this company was born "of the bubble" and never got its product development aligned with the market.

I thought the electronic compensation looked like a smart and timely item, especially for mmf. The bigger problem appeared to be execution.

Good luck to the BB alums in any case.

deauxfaux 12/5/2012 | 2:52:17 AM
re: Big Bear Put to Sleep Some smart people there, but this company was born "of the bubble" and never got its product development aligned with the market.

Good luck to the BB alums
chips_ahoy 12/5/2012 | 2:52:16 AM
re: Big Bear Put to Sleep >The bigger problem appeared to be execution.

Can you you specify here S?? I thought they did pretty well delivering their 40g and EDC technology.

CA
reoptic 12/5/2012 | 2:52:15 AM
re: Big Bear Put to Sleep This is classic example of VCs who keep company going knowing full well the market was not going to materialize but not willing to take a hit to portfolio via a writeoff.

The 40Gb market is the most overstated thing out there. Nobody wants this beyond a few technology demonstrations; it is completely not economical save for a few routes and some exotic applications. Every 40Gb chip company dead.
opticalring 12/5/2012 | 2:52:14 AM
re: Big Bear Put to Sleep After SA buy off there is not much left at that place.

150+ million down the drain
Stevery 12/5/2012 | 2:52:13 AM
re: Big Bear Put to Sleep chips_ahoy:
>The bigger problem appeared to be execution.

Can you you specify here S?? I thought they did pretty well delivering their 40g and EDC technology.



My info was that they lost a bunch of people, and then could not deliver new modules at 10G. It sounded like the execution failed on the transition between 40G & 10G.
AutoDog 12/5/2012 | 2:52:09 AM
re: Big Bear Put to Sleep Now that BigBear's 40G module is on its way to Finisar, who else is left with a 300MSA transponder?

Anyone else besides OpNext & CoreOptics?

-AD
AutoDog 12/5/2012 | 2:52:09 AM
re: Big Bear Put to Sleep >> Every 40Gb chip company dead.

Not quite. There are still 40G IC players, but 40G is not there only business:

Sierra Monolithics is the last man standing with a 40G mux/demux and people are buying it.

Ample is still around, but is anyone buying their 40G POS chip?

Not sure if CoreOptics counts... They have a 40G chipset build by Fujitsu, but who is buying besides Marconi?

-AD
o-man 12/5/2012 | 2:52:08 AM
re: Big Bear Put to Sleep AD

Come on man...

NEC FUJITSU OPTIUM JDSU AVANEX OPLINK and many others I am sure.......
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