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Optical/IP

Ciena, Cisco could acquire NeoPhotonics – analysts

On Wednesday, NeoPhotonics announced a new product "addressing the next generation of 100+ Gbaud systems to meet the ongoing growth in demand for bandwidth, especially between cloud data centers."

On Thursday, some financial analysts pegged the company as a likely takeover target.

The NeoPhotonics product announcement "offers further support for our view that NeoPhotonics is the best of breed optical component supplier addressing the highest performance bandwidth applications and therefore deserves a richer [stock] multiple relative to other optical component suppliers," wrote the financial analysts at MKM Partners in a note to investors Thursday.

"Given the increasing shift to higher speed optical interconnects and NeoPhotonics' solid technology addressing the highest performance end of the market and a solid track record of reliably delivering on its roadmap, we see a very high likelihood of NeoPhotonics being acquired by a larger optical component supplier or even by Ciena or Cisco," the analysts continued, adding that consolidation in the optical component space "is not new or unprecedented."

Indeed, Cisco has acquired Acacia and Luxtera, while II-VI acquired Finisar. More recently, Marvell said it will acquire Inphi.

If Cisco or Ciena did acquire NeoPhotonics, the move would put the company "in the driver's seat of the optical systems market," the analysts argued.

NeoPhotonics, for its part, has enjoyed a rising stock price in recent months that reached around $8 per share following its announcement Wednesday. The company said its new Class 60 Coherent components will help customers reach speeds around 1 Tbit/s over datacenter interconnect (DCI) distances, and up to 500 Gbit/s transmissions on long-haul routes.

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Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

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