Nortel Buys Optical Network Firm for $1.43 Billion

Nortel Networks continued the buying spree it began last week Tuesday, acquiring privately-held optical component firm CoreTek for $1.43 billion in stock.


Based upon a Nortel Networks share price of $119.75, the optical Net firm
will issue 8.9 million common shares on a fully diluted basis at closing. Up
to an additional $361 million in common shares would be issued upon CoreTek
achieving certain milestones.

Nortel (NT)
will incorporate CoreTek’s solutions, which use tiny, movable mirrors to
alter the wavelength of light emitted by semiconductor lasers and other
optical components. CoreTek’s devices are designed to allow networks to
change the wavelength of light in real-time as it travels through a network,
giving the network the flexibility to dynamically monitor and re-route
traffic. This ability helps boost the speed, performance, quality and
economics of the optical Internet.


Designed to operate in 10 gigabits per second systems, Coretek’s products
will add to the speed and quality that Nortel has branded as the standard
for today’s optical Net, with plans to evolve to operate in 40 Gbps and 80
Gbps systems. CoreTek’s chief executive officer, Dr. Parviz Tayebati, will
drive the development of CoreTek’s technology within Nortel.


In addition, CoreTek’s technology will complement Nortel’s acquisition of
Xros for $3.25 billion, sealed last Tuesday. Xros is a privately-held
switching firm that manufactures photonic switches, which allow data to be
switched through optical networks in the form of light.


“We will continue to move at Web-speed and employ a mix of alliances and
acquisitions to answer the ever-growing bandwidth demands of our customers
while at the same time exponentially driving down the cost of delivering
services and driving up profitability,” said Clarence Chandran, president of Nortel’s
service provider and carrier group.

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