ONI Systems purchases Finisar technology, introduces new optical services platform

Feb. 13, 2001
ONI Systems Corp., a provider of metro and regional optical networking, announced an agreement with Finisar Corp., a provider of gigabit fiber optic solutions for high-speed data networks, for ONI's new edge optical services platform: the ONLINE2500.

ONI Systems Corp. (Nasdaq:ONIS), a provider of metro and regional optical networking, announced an agreement with Finisar Corp. (Nasdaq:FNSR), a provider of gigabit fiber optic solutions for high-speed data networks, for ONI's new edge optical services platform: the ONLINE2500. Under the agreement, ONI will acquire technology and other assets associated with Finisar's Opticity product line for consideration totaling approximately $50 million. Finisar also announced that it has entered into a supply agreement for certain optical components for ONI's new edge optical services platform ONLINE2500 product, developed for flexible delivery of wavelength services directly to the network edge.

The technology being sold includes Gigabit Ethernet multiplexing, Fiber Channel multiplexing and coarse wavelength division multiplexing (CWDM) to deliver high-bandwidth optical services to the network edge for Gigabit Ethernet, Fiber Channel and SONET traffic. The ONLINE2500 enables delivery of a set of high-bandwidth services to carriers and enterprise customers by combining Finisar's data-centric edge optical transport capabilities with ONI's transparent wavelength capabilities and ONWAVE service-multiplexing technology.

"ONI sees the optical edge of the network as a prime opportunity," said Hugh Martin, ONI Systems president and CEO. "The conversion from electrical communication services to optical, high bandwidth services for the enterprise is now underway, with ONI positioned to lead the charge and deliver the optical network right to the enterprise."

The technology to be acquired is optimized for delivering high bandwidth optical services with sophisticated service monitoring capabilities to the network edge. Gigabit Ethernet and Fiber Channel grooming capabilities are included, along with coarse WDM optical transport technology and sophisticated service monitoring for the network edge. ONI and Finisar have also entered into a volume purchase agreement under which ONI will purchase from Finisar certain optical components for the ONLINE2500 product. The agreement helps secure component supply for this product.

OPTX network management software, already in use across ONI's ONLINE 7000, 9000, and 11000 platforms, manages and provisions the ONLINE2500. The OPTX software includes network engineering tools and management portals for customer-managed services. With the ONLINE2500, service providers will have the means to provision and manage expanded optical end-to-end services from enterprise through the network core, using ONI's extended family of ONLINE products.

The ONLINE2500 is expected to be generally available in the second quarter of this year, for volume delivery in the third quarter.

Under the terms of the agreement, ONI will acquire the technology associated with Finisar's Opticity product line for approximately $50 million, comprised of $30 million in cash and $20 million of common stock, with the number of shares calculated using the average price per share for the ten trading days prior to closing. Cash payments totaling $25 million will be made upon the timely completion of certain mutually agreed deliverables, due after the transaction closes. The transaction is expected to close during the first calendar quarter of 2001 and will be accounted for by ONI using the purchase method of accounting. As a result of this transaction, the company expects incremental 2001 revenues, beginning in the third quarter, of $15 million above the previous forecast; bringing its total year revenue forecast to $225-$235 million. Including the amortization of goodwill and intangibles, the acquisition is expected to be accretive to reported earnings per share in the fourth quarter of calendar 2001.

About ONI Systems:

ONI Systems (Nasdaq:ONIS) develops, markets and sells all-optical networking equipment specifically designed to address bandwidth and service limitations of regional and metropolitan networks. For more information, visit www.oni.com.

About Finisar:

Finisar Corporation (Nasdaq:FNSR) is a leading provider of fiber optic subsystems and network performance test systems which enable high-speed data communications over Gigabit Ethernet local area networks (LANs), Fiber Channel storage area networks (SANs), metropolitan data networking applications (MANs), and CATV. For more information, visit www.finisar.com.

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