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Avanex preparing for boarders?

November 26, 2008

Posted by Stephen Hardy

Paul Bonenfant, communications components analyst at Morgan Keegan & Co., reports that Avanex filed an 8-K after the market closed last night revealing that the compensation committee of the board of directors had approved "change in control agreements" for the CEO (which, as of November 18, is now officially Giovanni Barbarossa, who also serves as company president and member of the board), senior vice presidents of sales and operations, and other VPs (including the interim CFO). The agreements are meant to provide incentives for these executives to remain with the company upon change of control -- in other words, if it's sold or merged.

This led Bonenfant to wonder if the much discussed hook up with Bookham is on again. He points out that while the combination looks good on paper, it would hold execution risks for Bookham and likely would delay its move toward profitability (as if the current economic situation hadn't done that already).

On top of Bonenfant's concerns, I recall that Bookham chief Alain Couder has repeatedly told me that if he gets involved in M&A;, it will be to move into new markets. "My experience in merging two companies with similar product lines in the same market is catastrophic," he told me once. And while the overlap between Avanex's and Bookham's activities isn't 100%, there would be a lot of redundancy in amplifiers and transceivers, as well as in the markets served. (Couder also discussed his M&A; philosophy during a video interview at OFC/NFOEC.)

So if the Bookham/Avanex marriage hasn't happened yet, it may be because Bookham is looking for something else in a partner.

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The Lightwave editorial staff uses The Lightwave Blog to share their thoughts on optical communications and whatever else might be the current topic of conversation from cubicle to cubicle. Feel free to add your own opinions.

Stephen Hardy is editorial director and associate publisher of Lightwave, which makes him responsible for the editorial aspects of the Lightwave franchise. A technology journalist since 1982, he once had his job duties described as "gets paid to tick off advertisers ".

Meghan Fuller is senior editor of Lightwave. She has degrees from Franklin & Marshall College in Lancaster, PA, and the University of Delaware and is a card-carrying member of Red Sox Nation.