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JDS Uniphase Completes IBM Optical Buy

Ottawa-based fiber-optic giant JDS Uniphase Corp. said it has completed its recently announced acquisition of IBM Corp.'s optical transceiver business for about $340 million in cash and Big Blue stock.

JDS Uniphase said it paid Armonk, N.Y.-based IBM $100 million in cash and 26.9 million shares of JDS Uniphase common stock in the transaction. As previously announced, additional payments of up to $85 million in cash or stock may be made in early calendar 2003 based on the financial performance of the acquired business, officials said.

JDS competes fiercely with fellow Canadian firm Nortel Networks and San Jose, Calif.'s Cisco Systems Inc. in sector for which analysts have high hopes. With its competitive sights trained on Nortel and Cisco in a time when high-tech markets are flagging across the board, JDS Uniphase's thinking was to provide optical products beyond its existing telecommunications markets to growing data communications markets.

What JDS Uniphase gains with the acquisition, which was announced Dec. 19, are IBM's optical data communications products, which include small form factor (SFF) transceivers and Gigabit Interface Converters (GBIC) for storage area networks (SAN) and local area networks (LAN) using optical Fibre Channel and Gigabit Ethernet protocols. Big Blue's products expand the JDS Uniphase transmission module product line from long haul telecommunications to very short reach carrier and enterprise applications. This, JDS, said, will result in the "industry's broadest optical transmission product line."

JDS is battling with equipment giants for a bigger piece of the fiber-optic product pie. JDS said it expected lower sales in its third fiscal quarter, which could be 10 percent to 15 percent lower than second-quarter sales.

NOTE: InternetNews.com's Clint Boulton contributed to this report.