Another networking company snapped up a fiber optic equipment maker Tuesday. Nortel Networks (NYSE: NT) said it will buy Photonic Technologies, a pioneer in strategic optical components for up to $35.5 million in cash.
In March, Nortel announced it would buy CoreTek, another optical components maker for about $1.43 billion. Nortel shares have fallen to 51 5/8 from a 52-week high of 72 1/16, despite a first quarter which beat expectations in its first quarter.
Nortel already owned about one third of the privately held company. Photonic Technologies' key optical component technology will further strengthen its delivery of a high- performance all-optical Internet.
Photonic Technologies' circulators and filters are critical technologies for high-speed optical networks and Dense Wavelength Division Multiplexing (D-WDM) networks, the company said. Its products will accelerate Nortel Networks lead as the industry moves from 10 Gigabits per second (Gbps) systems to 40 and 80 Gbps systems.
Competitor Cisco most recently acquired Qeyton Systems for its optical networking technology. Lucent has also been beefing up on acquisitions.
Photonic Technologies will become part of Nortel's High Performance Optical Component Solutions (HPOCS), the unit recently formed to bring together all of its businesses serving optical systems producers.
Nortel first formed an alliance with Photonic Technologies in 1998, taking a one third stake in the company, and working closely with it to develop their technology. The Australia-based company had revenue last year of $2.5 million.
The acquisition is expected to be neutral with respect to Nortel Networks earnings per share from operations this year (excluding acquisition-related charges).
The optical components market is expected to grow to $23 billion in 2003, from $6.6 billion last year, a growth rate of 37 percent a year, according to analyst firm RHK.