Oclaro acquires Mintera with 40, 100 Gbps in mind

July 21, 2010
JULY 21, 2010 By Stephen Hardy -- Oclaro, Inc. (NASDAQ: OCLR) has acquired privately held Mintera Corp., one of the pioneers in 40-Gbps systems, line cards, and modules. Terms of the deal call for a payment of $12 milion in cash upon close, plus a revenue-based earn-out ranging from $0 to $20 million payable in cash or stock at Oclaro’s option.

JULY 21, 2010 By Stephen Hardy -- Oclaro, Inc. (NASDAQ: OCLR) has acquired privately held Mintera Corp., one of the pioneers in 40-Gbps systems, line cards, and modules. Terms of the deal call for a payment of $12 million in cash upon close, plus a revenue-based earn-out ranging from $0 to $20 million payable in cash or stock at Oclaro’s option. Achieving cumulative revenues of $70 million over the next 18 months would lead to the maximum $20 million earn out.

Oclaro asserts the acquisition of Mintera will enable Oclaro to offer components and subsystems covering all of the major modulation technologies necessary for 40-Gbps data transmission in regional, metro, long-haul (LH), and ultra long-haul (ULH) networks. (See "Oclaro execs explain Mintera deal" on the Lightwave Blog for more from Oclaro sources on the deal.)

While Mintera’s first generation of 40-Gbps technology struggled in competition with the optical duobinary modulation format championed by companies such as StrataLight (now a part of Opnext), its second-generation Adaptive DPSK technology has seen wide acceptance. The offering dovetails nicely with Oclaro’s portfolio of DQPSK components and modules, as Mintera had decided not to pursue DQPSK in favor of a coherent-based approach paired with polarization-multiplexed quadrature phase-shift keying (PM-QPSK; see the Lightwave Channel interview with Dr. Terry Unter, Mintera president and CEO, for more). The 40G coherent module should be in production by the second half 2011, Oclaro says.

Mintera had partnered with ClariPhy Communications to help develop the electronics necessary for the 40G coherent receiver (see "Mintera, ClariPhy partner for 40G coherent product"). Oclaro subsequently invested in ClariPhy with an eye toward the coherent 100G market (see "Oclaro allies with ClariPhy for 100G coherent").

“Oclaro’s acquisition of Mintera is the latest in a series of strategic moves to increase our addressable market, better serve our customers and outdistance our competition,” said Alain Couder, president and CEO, Oclaro. “Through this acquisition, Oclaro has taken another important step forward in building upon our leadership position in 40-Gbps regional and metro networks by broadening our product portfolio and systems expertise to expand into 40-Gbps LH and the 100-Gbps coherent markets.”

Unter has agreed to remain with Oclaro for a transitional period and lead the new 40/100-Gbps modules and subsystems division, reporting to Couder. However, Oclaro says it hopes to use this tenure to lure Unter into sticking around as part of Oclaro’s executive management team.

Mintera garnered approximately $20 million in revenues for the 12 months ended June 30, 2010. Oclaro expects the new assets will generate operating losses (excluding restructuring charges and stock compensation) of between $1 million and $2.5 million a quarter in each of its remaining calendar 2010 quarters. However, it expects the bottom line to improve each quarter, culminating with breakeven by the March calendar 2011 quarter. Oclaro’s gross margin target for Mintera-related business is 40% to 45%, with operating margins of 20 to 25%. These figures are “well above Oclaro’s existing target model,” the company asserts.

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