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Tellabs Invests in White Rock

Light Reading
OFC/NFOEC News Analysis
Light Reading
3/24/2003
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Fulfilling a prediction made in Light Reading early last month (see Tellabs, White Rock Getting Cozier), Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) has invested an undisclosed sum of cash in White Rock Networks (see Tellabs Invests in White Rock). It's also added one of its top executives, senior VP of North American sales Rob Pullen, to White Rock's board and unfurled plans for more comprehensive integration of Tellabs and White Rock products (see Tellabs Invests in White Rock).

At least one analyst thinks it's a harbinger of even greater closeness to come. "I think this is going to evolve into a full pickup in the near term," says Mark Lutkowitz, VP of optical networking research at Communications Industry Researchers Inc. He wouldn't be surprised to see Tellabs acquire White Rock this summer.

Tellabs' spokeswoman Jean Medina won't comment on any possible future deals. White Rock's VP of marketing Andrew Knott says nothing's in the cards "in the near or medium term."

But it's clear Tellabs is banking at least part of its future on the startup. Today's deal builds on an agreement inked early in 2002 (see Tellabs Takes a New Tack), by which Tellabs adds aggregation capabilities to its optical transport gear.

Specifically, Tellabs has OEM'd White Rock's next-generation Sonet ADMs -- the VLX2010 OC48 (2.5-Mbit/s) and VLX2020 OC192 (10-Gbit/s) -- into the Tellabs 7100 optical transport system, renaming the product the Tellabs 7120 access multiplexer, a shelf add-on to the 7100. Tellabs manages the 7120 with its own software.

Tellabs can't specify the customers that have bought its White Rock add-ons, but Medina says Tellabs has realized both sales and "increased interest" in the gear. Clearly, there's been enough interest to justify more development.

Under the new plan, Tellabs will market a customized version of the White Rock VLX2020. "Customized" generally means integrated with Tellabs' management platform, Knott says, although other features are being discussed for future projects.

Tellabs' Medina says the customized gear is available now.

Tellabs also hopes to extend interoperability of White Rock's gear with Tellabs 6400 and 6500 transport switches and its 5500 digital crossconnect. This development effort has just begun.

White Rock and Tellabs say today's news won't affect White Rock's only other OEM agreement -- to integrate its VLX2020 with gear from Mahi Networks Inc. For Mahi, as for Tellabs, White Rock provides DS3 (45 Mbit/s) and OC-n aggregation, linking metro links, such as T3 (45 Mbit/s) and Ethernet connections, to a Sonet backbone.

Mahi's latest product, the Mi7 Optical Transport Switch offers an optional add-on that contains White Rock's gear (see Mahi Swims Into the Metro Core).

Despite speculation last year that Mahi and White Rock might join forces (see Mahi and White Rock: Just Good Friends), CIR's Lutkowitz thinks that's unlikely: White Rock is doing too well on its own. As before, Tellabs won't comment, and Knott of White Rock echoes what he said of a possible Tellabs merger: "I don't see any sign of that happening in the near or medium term."

Well, what about the long term? Knott isn't speaking to that, but it seems too soon to tell, in any case. Tellabs must first decide whether it wants to take on another major startup. While its experience with Ocular has paid off handsomely, there's no assurance history will repeat itself -- especially not in today's depressed telecom market.

— Mary Jander, Senior Editor, Light Reading

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single mode figure
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single mode figure,
User Rank: Light Beer
12/5/2012 | 12:22:50 AM
re: Tellabs Invests in White Rock
Having worked both in the silicon valley and north texas telecom corridor I am amzed that the number of startups that attracted outside partners was very limited. Texas has always wanted the reputation of the valley but lacked the complexity to pull it off. I think Tellabls investment in White Rock speaks greatly.
Iipoed
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Iipoed,
User Rank: Light Beer
12/5/2012 | 12:22:46 AM
re: Tellabs Invests in White Rock
Two golfing giants are merging. Main difference between the silicon valley and Texas startups. The texas startups are much more serious about their golf games, somehow they seem to have the time. Of course when you are courting telcos as your primary customer instead of working to inspire confidence in your technology through endless technical meetings and hardware evaluations you go play a round of golf since most telco decision makers are working there for the nesting security and perks.
eyesright
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eyesright,
User Rank: Light Beer
12/5/2012 | 12:22:44 AM
re: Tellabs Invests in White Rock
Maybe it's because Whiterock has a very good (read - it is real) product that is shipping. Maybe it got this way because they;

a) understand what their product niche is.
b) listened to their customer.
c) executed.

Too many Valley companies complain that their customers don't get it, flount their arrogance, and fail to execute.

While the name of the game in Texas may be golf, it's less arrogant than the Valley practice of comparing new sports cars...
single mode figure
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single mode figure,
User Rank: Light Beer
12/5/2012 | 12:22:44 AM
re: Tellabs Invests in White Rock
Your very astute! I can say this much, when we moved a optical startup from sunnybail to allen, on weekends and late into the night all the engineers in the valley could not seem to get home.

I slept under my desk for two reasons, surfing on the davenport back then was common, and late into the night the underside of the desk looked good.

Texans are golfing demigods, and telco guys like Bross and the boys always cut fat deals for stock from boys like qtera...a great situation. I lived in Texas, first getting into telecom in 1984. I came back in 2000, little had changed. I like texas in that freedom from certain strictures are there, and i hated sleeping on old relative sofas during the bubble in the valley...
single mode figure
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single mode figure,
User Rank: Light Beer
12/5/2012 | 12:22:43 AM
re: Tellabs Invests in White Rock
Your absolutely right, the arrogance of the valley was evident. I knew guys that complained that they only made 30 million on their stock, one guy Steve 2passgasska from xros was a boxster hungry genius until xros could not execute. The valley was full of these guys and they sunk a really good thing, cause of greed.
optical
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optical,
User Rank: Light Beer
12/5/2012 | 12:22:42 AM
re: Tellabs Invests in White Rock
This is great news for all in Telecom (e.g some postive news!). It certainly appears that Tellabs will be acquiring White Rock in the future. White Rock product is a perfect add-on to TLABS product offering. Despite the fact that the White Rock building block concept is lacking as a full featured stand alone SONET ADM, it's a great aggregation device and that is what TLABS needs.

Good Luck White Rock!
befuddled
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befuddled,
User Rank: Light Beer
12/5/2012 | 12:22:39 AM
re: Tellabs Invests in White Rock
Tellabs took a 4% position in WRN with this investment. Only 92M more shares to be purchased to gain a majority position. This is still an excellent market validation for the WRN crew.

A word of advice to my former brethren at the Rock; find or develop the silicon that will allow VT level grooming for your DS3/STS1 and OCn drop shelves. This will complete your package and allow TLabs to flex it's strength in the metro core.

Rock on!
pipesoflight
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pipesoflight,
User Rank: Light Beer
12/5/2012 | 12:21:54 AM
re: Tellabs Invests in White Rock
Tellabs took a 4% position in WRN with this investment. Only 92M more shares to be purchased to gain a majority position. This is still an excellent market validation for the WRN crew.

A word of advice to my former brethren at the Rock; find or develop the silicon that will allow VT level grooming for your DS3/STS1 and OCn drop shelves. This will complete your package and allow TLabs to flex it's strength in the metro core.

Rock on!

Response:
Not only that, remember the guy that solved the dribbling bit errors problem so systems could ship (grounding and via issues). Also remember the guy that helped you solve the near-end & far-end cross talk cable issues. Also remember the guy that helped you solve the thermal issues. Also remember the guy that helped you solve the foot print issues on components. Also remember the guy that helped you design low maintenance backplanes. Also remember the guy that helped you solve the noise problems on the electrical 2.5Gbps issues. Also remember the guy that helped resolve some of the DS3 shelf problems. Also remember the guy that beat down the debug pile in manufacturing. Also remember the guy that fixed the debug board for the uP interface used by software. The list goes on!!!
ajo2
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ajo2,
User Rank: Light Beer
12/5/2012 | 12:21:09 AM
re: Tellabs Invests in White Rock
befuddled: Have no fear, we have several more killer products in the pipeline.

pipesoflight: Don't worry - we remember him. I hope things go well enough over the course of the year that we can hire him back. Losing him was especially hard.

pipesoflight
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pipesoflight,
User Rank: Light Beer
12/5/2012 | 12:18:22 AM
re: Tellabs Invests in White Rock
befuddled: Have no fear, we have several more killer products in the pipeline.

If that were true then you would need him now more than ever. I think the ex-microprocessor guy did an awesome job and he repeated that on the dual OC48 for a first spin. Too bad he recognized the local spin and didn't return once called.

If you could keep the grunts off of the instant messenger you would be more productive. Glad to hear some changes occurred in Manufacturing. I advocated the same sentiment to be more productive. I guess that didn't go over well at the time and may have been viewed as negative.
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