Tellabs Buying Ocular Networks

Tellabs Inc. , a Naperville, Ill.-based telecommunications equipment firm, said it is buying next-gen optical gear supplier Ocular Networks for about $355 million in cash and options.

Tellabs, which said earlier this month that it would reduce its work force by about 1,000 people, said the acquisition would expand its market by up to $5 billion in 2003 and up to $9 billion in 2005. In terms of business, Tellabs said the purchase combines Ocular’s next-generation technology with its customer relationships, distribution channels, customer service and field support.

“This acquisition benefits customers by marrying Tellabs’ unique distribution strength with future network architectures,” said Richard C. Notebaert, president and chief executive officer of Tellabs. “Now, we will be able to help customers optimize their network efficiency all the way to the edge.”

Ocular Networks’ Optical Service Xchange (OSX) next-generation transport system logically extends Tellabs’ product lines by supporting distributed grooming throughout the metropolitan network. The new technology lets Tellabs increase network utilization effectiveness in more than 1,000 additional central offices, while avoiding backhauling traffic in the network.

Tellabs’ acquisition of Ocular Networks is expected to be complete in the first quarter of 2002 and is subject to Hart-Scott-Rodino approval. Tellabs officials added that they plan to retain the Ocular Networks office site in Reston, Va.

Besides its layoffs announced last month, Tellabs had said it added resources to accelerate development of its Titan 6100 dense wavelength division multiplexing product, while at the same time it discontinued development of the Titan 6700 core optical switch.

With the changes, Tellabs had said it would record restructuring and one-time charges of about $150 million in its fourth quarter of 2001. The charges are expected to include restructuring charges of $26 million, inventory-related charges of $85 million and other asset-related charges of $39 million.

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