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Nortel Networks Acquires Optical Switching Firm

In a move to bolster its optical Net strategy, Nortel Networks Tuesday bought photonic switching firm Xros for $3.25 billion.

Based upon a determined price of Nortel Networks (NT) common shares of approximately $118.12, the acquisition will result in Nortel Networks issuing an expected 27.5 million shares on a fully diluted basis.

Nortel plans to absorb Xros' micro-mirror technology, which allows data to be switched through optical networks in the form of light. Xros provides the capability to scale network hubs with hundreds of times greater capacity. The solution will also act in conjunction with Nortel's Qtera ULTRA solution to deliver Nortel's all-optical network, which the company claims will be the world's first.

Xros' technology is designed to operate at today's industry standard, 10 Gigabits per second (Gbps), as well as the future optical Internet speeds of 40 Gbps and 80 Gbps, capabilities that Nortel has announced for introduction to the marketplace next year.

"An all-optical Internet will deliver millions of instant Internet sessions, thousands of video channels, and vast amounts of e-business transactions on an unprecedented scale,'' said Clarence Chandran, president, service provider and carrier group, Nortel Networks.

Nortel Networks is a world leader in optical Internet, with more than 75 percent of North American Internet backbone traffic traveling across Nortel's systems.