Alcatel Adds Edge Routers With $150M Buy

Telecom infrastructure giant Alcatel will pay about $150 million for router maker TiMetra, another indication that the industry might be poised to emerge from a two-year slump.

With the pickup, Alcatel is gaining a line of IP/MPLS products that allow carriers to provision services — such as virtual private networks and virtual private LANs — over a packet switched network.

“Alcatel understands the service provider imperative to offer these new, billable data services efficiently and profitably,” said Mike Quigley, a senior executive vice president with Paris-based Alcatel.

The deal should close in the third quarter, after which, TiMetra will be folded into Alcatel’s U.S. unit.

TiMetra was founded in 2000 and is privately held. Basil Alwan, CEO of the Mountain View, Calif., firm and a former Nortel vice president, said becoming part of Alcatel provides global reach for its products.

“The TiMetra team has delivered the industry’s most advanced service router. . . ” Alwan said. “(This achievement) will be reinforced by Alcatel’s worldwide presence, stability, and depth of product portfolio.

In addition to Alcatel’s acquisition, there was another piece of potentially encouraging sector news. Warren Buffet’s Berkshire Hathaway investment group has purchased $20 million of stock in WilTel Communications Gropu, a Tulsa, Okla., fiber-optic company.

Although $20 million represents only a fraction of Buffet’s investments, it’s notable because he has avoided most telecom stocks, focusing instead on makers of shoes, furniture, and retailers.

One exception in the portfolio is fiber-optic network operator Level 3. Last year, Buffet pumped $500 million into Level 3, giving the company the capital to buy failing managed service provider Genuity.

Alcatel’s buy also comes three days after Tellabs agreed to buy privately-held, San Jose, Calif.-based Vivace Networks for $135 million to beef up its offering with edge routers and switches.