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Tellabs buys Future Networks for $181 million

The telecom equipment company will acquire the cable modem maker to strengthen its cable network equipment strategy.

2 min read
Tellabs announced Monday it will buy Future Networks to strengthen the company's cable network equipment strategy.

Tellabs said in a statement that it will pay $181 million in cash for the stock of Future Networks, an Alpharetta, Ga.-based maker of cable modems that employs about 50 people.

The company, along with competitors such as Nortel Networks and Cisco Systems, makes equipment for optical and cable networks. The company also markets switches that move voice traffic over data networks.

Cable companies have been trying to upgrade their networks in recent years to offer services beyond television, such as telephone and Internet access. The cable industry can charge customers more money if they can offer services like voice data and Internet access in addition to Showtime and MTV.

"The objective over time is to integrate many services over cable lines such as voice, data and video," said Tim Savageaux, an analyst at WR Hambrecht.

Excluding goodwill, Tellabs expects the purchase to dilute earnings by 1 cent a share in 2001, then add to earnings afterward. Including goodwill, the Lisle, Ill.-based company said the acquisition will dilute earnings by 6 cents a share in 2001, and 5 cents in 2002.

Future Networks makes cable modems that send and receive data transmitted from local cable operators using equipment mostly made by Tellabs, Nortel, or Cisco Systems. The acquisition is intended to extend Tellabs' technology presence among cable operators.

Future Networks' technology could also help Tellabs' voice strategy. Tellabs, with the help of Future Networks, plans to make cable modems that can also handle voice data. The cable industry is moving to a standard that transmits voice over cable lines using more efficient Internet protocols.