Clearfield, Inc.(NASDAQ: CLFD) has taken another step in its market expansion strategy with the acquisition of Calix Inc.'s (NYSE: CALX) outdoor powered cabinet product line. The company paid $10.35 million in cash on hand for the products, the assumption of related warranty obligations, and certain purchase commitments. The deal includes an agreement through which Calix will resell the now Clearfield-branded powered cabinets.
Powered cabinets typically hold PON hardware such as optical line terminals (OLTs). They are paired in the field with PON cabinets that contain splitters and related PON passives, which Clearfield already provides as part of its FieldSmart line, explained Kevin Morgan, Clearfield's CMO. Adding the new products, which include the ODC 100/200 and ODC 1000/2000 series, to the company's portfolio therefore represents a natural extension for Clearfield, Morgan said.
The new line offers the opportunity to add approximately $6 million in incremental revenue to Clearfield's anticipated fiscal 2018 results and at least $10 million in incremental revenue on an annual basis, the company said in a press release. The fact that operators typically order powered cabinets well in advance of PON cabinets also will alert Clearfield to upcoming sales opportunities for the latter products, Morgan added. Being able to provide both types of cabinets also increases Clearfield's opportunities for engagement with Tier 1 and Tier 2 service providers, he said.
Such engagement opportunities are an important part of Clearfield's corporate agenda. "This acquisition and partnership represents a major step in Phase III of our growth strategy, that centers around capturing the broader market opportunity through channel development, strategic alliances, and product line enhancements," said Cheri Beranek, president and CEO of Clearfield, via the press release.
"In addition to expanding our product line and strengthening our position in our core wireline and wireless markets, we're also now able to get involved earlier in the sales cycle, since powered cabinets are designed earlier in fiber-to-the-home deployments," Beranek continued. "More importantly, we're accelerating our expansion into the Tier 1 market by leveraging Calix's existing relationships with these larger accounts. Longer term, and as the demand for newer solutions such as NG-PON2 proliferate, this acquisition will help elevate Clearfield's position in the marketplace as the clear cabinet supplier of choice for both passive and powered configurations."
Powered cabinets typically are designed to complement a specific PON vendor's hardware, Morgan said. He expressed confidence Clearfield will be able to keep pace with Calix's product road map to continue to serve the PON vendor's customers in the future. Clearfield could expand its powered cabinet capabilities to complement PON hardware from other vendors, Morgan allowed.
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