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Lucent acquires Gigabit start-up

The glut of start-ups vying for a share of the nascent next-generation Ethernet networking market is starting to shake out.

The glut of start-ups vying for a share of the nascent next-generation Ethernet networking technology market is starting to shake out.

Telecommunications monolith Lucent Technologies (LU) snagged gigabit-speed networking equipment maker Prominet today for $200 million in stock. The move adds to Lucent's growing portfolio of data communications products.

Data networking firm Bay Networks purchased Rapid City Communications for $155 million in June, and other start-ups are quickly signing up third-party reseller partners in order to remain viable players in the gigabit game.

Some analysts have lamented the crowded field of Gigabit Ethernet start-ups, noting that several will fail in the rush to provide gigabit-speed networking technology. The market for Gigabit Ethernet is not expected to be significant until next year, and the real money--revenues in the space are predicted to reach around $1.5 billion by various market researchers--is not predicted to roll in until the turn of the century.

A standard for Gigabit Ethernet is on track to be finalized during the first quarter of next year. The technology extends classic Ethernet technology--the dominant hardware for building department networks--to 1,000-mbps (megabits per second) speeds from its current 100-mbps peak.

The deal is expected to be completed by the end of next year's first calendar quarter. Lucent will take a one-time non-cash charge against earnings as a result of the purchase.

Lucent has been on a spending spree ever since it gained independence from its former parent company, AT&T. In July the company purchased Octel, a voice-, fax-, and electronic-messaging technology firm, for 1.8 billion. That was followed by its October purchase of remote access player Livingston Enterprises for $650 million.