Riverstone, which plans an initial public offering in the coming months, will sell its high-speed network routing devices to Tellabs, the biggest maker of equipment to manage traffic on phone networks. Tellabs in turn will bundle Riverstone's equipment with its own cable modem technology and sell them to high-speed cable Internet access providers.
The agreement Tuesday is significant for Riverstone, which earned $20.5 million in revenue last quarter. Riverstone, which was spun off from Cabletron earlier this year, competes against Cisco Systems, Foundry Networks and others in the lucrative market for routers, or hardware that sends Net traffic across a network at high speeds.
For Tellabs, the partnership furthers the company's oft-stated goal of offering equipment that handles voice, video and data traffic. Tellabs will sell Riverstone and its own equipment to cable Internet service providers that want to offer new services, such as the ability to make phone calls over the cable network.
As part of the deal, the two companies will jointly develop and manufacture products, Riverstone executives said. Tellabs will take Riverstone's routers and rebrand them as its own.
Despite unfavorable market conditions, Riverstone in September filed plans to go public, hoping to raise $118 million by selling about 10 million shares at $12 to $14 a piece. Riverstone executives declined comment on when the company plans go public, but previously said it hoped to have its IPO this fall. Riverstone will be the first of four Cabletron spinoffs to go public.