Big Bear Put to 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