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The Lightwave Blog
Bookham/Avanex: Why now?
January 28, 2009
Posted by Stephen Hardy
One of the more interesting aspects of yesterday's announcement that Bookham and Avanex had agreed to merge was the timing -- what took so long?
Alain Couder and Giovanni Barbarossa were asked during yesterday's conference call about the merger's timing. While Couder answered that there was no reason to wait out the downturn before consumating the deal, Barbarossa piped in with "My question was why we didn't do it yesterday!"
Given that has been pretty much the sentiment among most observers of the space, I got through to Yves LeMaitre (thanks Howard!), currently Bookham's vice president of telecommunication sales and vice president of corporate marketing and future head of the combined company's non-telecom business, and posed the question to him.
According to LeMaitre, the timing had a lot to do with the current macro-economic environment. The time is right for consolidation in the industry, he feels. Also, the companies' current valuations increased the feasibility of a merger. Finally, LeMaitre echoed a story Couder told during the call about a "trial run" interaction between the executives of the two firms that convinced the Bookham president and CEO that the two companies could work compatibility together.
One has to wonder at this point whether the departure of Jo Major as Avanex president and CEO last July was the result of a difference of opinion within the senior management ranks about whether it was time to find a buyer. Given Barbarossa's enthusiasm for the deal, it certainly appears he's happy with what has taken place.
The Avanex/Bookham merger is on!
January 27, 2009
Posted by Stephen Hardy
The long-rumored merger of Avanex and Bookham is a rumor no longer. I'm on hold as I write this, waiting for the conference call to start.
According to someone at Bookham's PR firm, it's believed that Bookham will own a majority stake in the combined company, something like 53.25%. Bookham also will have a 4-3 majority on the board.
More soon...the conference is starting now.
How do you like us now?
January 22, 2009
Posted by Stephen Hardy
As you may remember, I highlighted back in August the fact that Lightwave magazine was undergoing a redesign. The fruits of our labors have finally been unleashed on the world -- and I'm curious about what the world thinks.
Those of you who subscribe to the magazine should have received an email yesterday from me offering links to both HTML and PDF versions of the January issue. If you know us only from this website, you can check out the 'zine here.
My editorial in the December issue described what we were hoping to accomplish. Basically, we've tried to combine the readability of a printed magazine (you can print out the articles easily if you really like paper) with the multimedia and interactive aspects of websites.
How did we do? You can comment below or go to our corner of the Interconnection World community on our sister site, Connector Specifier.
Ovum: Nortel's move may result in more balanced industry
January 16, 2009
Posted by Meghan Fuller Hanna
Ovum analysts Dana Cooperson and Matt Walker believe that Nortel's bankruptcy filing may result in a more balanced industry structure for communications equipment.
In a comment issued this morning, Cooperson and Walker note that when the latest phase of Nortel's downward spiral took shape four months ago--with the announcement that it would explore divestiture of its Metro Ethernet Networks (MEN) division--they argued that "a more radical approach than divestiture was needed to cure the company's woes."
While the bankruptcy filing is radical, the analysts believe it will also be exploited by the company's competitors, who are "now in a strong position to remind customers that Nortel can no longer give assurances of continued development of any specific products, which will surely impede Nortel's ability to bring in new business."
In fact, say Cooperson and Walker, Nortel's bankruptcy may open the door for broader industry rebalancing. They cite four specific examples, excerpted here:
Finally, Cooperson and Walker concede that Nortel's decision to file for bankruptcy now, when it still has $2.6 billion in cash reserve, may enable it to re-emerge as a smaller, more focused version of itself. However, they believe the scenarios they mapped out above, in which "rivals use Nortel's bankruptcy as a chance to reshuffle the supplier landscape dramatically to their benefit, seem more likely."
Industry reaction to Nortel's bankruptcy filing
January 15, 2009
Posted by Meghan Fuller Hanna
Nortel yesterday announced that it was filing for bankruptcy, a move that did not exactly come as a surprise, given the rumors swirling around the industry over the last several months.
In September, Nortel announced that it would explore a divestiture of its Metro Ethernet Networks (MEN) Business, including its optical and Carrier Ethernet portfolios. Its most frequently cited suitors included Huawei, Cisco, and Nokia Siemens Networks, with Alcatel-Lucent and Motorola considered long shots as both struggle with problems of their own.
In December, The Toronto Globe and Mail reported that Nortel had received offers from "three serious bidders" and was considering selling off additional assets in lieu of seeking bankruptcy protection. In the meantime, the company continued to burn cash, the value of its shares continued their free-fall, and the company inched closer to NYSE delisting. In late December, news broke that the company was, in fact, exploring bankruptcy as an option, and several analysts argued that this could be its best course of action. In a research note dated December 19, 2008, UBS analyst Nikos Theodosopoulos offered the following viewpoint:
And now the deed is done, leaving the telecom industry to ponder what may be next for the Canadian telecom giant. Will the company emerge from bankruptcy stronger than ever, or will it be forced to sell assets in what could amount to a fire-sale?
In an article from yesterday's New York Times, "Nortel Seeks Bankruptcy Protection", Ian Austen cites several analysts who believe that the company is likely headed for liquidation. If they are correct, he writes,
A news article in yesterday's Wall Street Journal quoted telecom analyst Ping Zhao of CreditSights, who "gave Nortel little hope of emerging from bankruptcy. 'They were already out of favor due to their weak finances,' [she said,] 'but for any of the new projects, they are definitely out of the picture' due to the filing."
Today's Toronto Globe and Mail argues that "Nortel needs a plan, fast." Writers Simon Avery, Jacquie McNish, and Shawn McCarthy note that Nortel has not yet formulated "a master plan on how to re-emerge a stronger company."
Over at Bloomberg.com, reporter Amy Thomson notes that some of Nortel's customers, including Verizon, are vowing to stick around, but they may already be weighing their options.
Finally, Toronto Globe and Mail columnist Derek DeCloet argues in today's edition that Nortel should not rely on a government bailout but instead needs to refine--or perhaps redefine--its corporate vision:
So what do you think? Does bankruptcy represent Nortel's best path forward?
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