Cisco to acquire CoreOptics

MAY 20, 2010 By Stephen Hardy -- Cisco (NASDAQ: CSCO) has announced its intent to acquire CoreOptics Inc., the privately held designer of chips and optical modules for high-speed and extended reach optical networking applications. Cisco will pay approximately $99 million in cash and retention-based incentives in exchange for all shares of CoreOptics in a deal the company expects will close in the second half of this calendar year.

MAY 20, 2010 By Stephen Hardy UPDATED -- Cisco (NASDAQ: CSCO) has announced its intent to acquire CoreOptics Inc., the privately held designer of chips and optical modules for high-speed and extended reach optical networking applications. Cisco will pay approximately $99 million in cash and retention-based incentives in exchange for all shares of CoreOptics in a deal the company expects will close in the second half of this calendar year.

Cisco expects to leverage CoreOptics’ expertise to provide 100-Gbps capabilities its service provider customers. Whether that is strictly on its optical platforms or in its routers as well remains to be seen.

CoreOptics is already providing 40-Gbps modules based on what it calls CP-QPSK, or coherent polarized quadrature phase-shift keying, to Cisco for its ONS 15454 (see "OFC/NFOEC Reporter's Notebook, Day 4"). The Optical Internetworking Forum has focused its 100-Gbps DWDM specification work around similar transmission technology, so the path toward 100 Gbps would appear to be clear.

What initially wasn’t clear is what would happen to CoreOptics’ other 40G customers, Nokia Siemens Networks and Fujitsu Network Communications (and, according to some observers, Ericsson), the latter of which has not publicly acknowledged CoreOptics as a supplier for the 40G capabilities the systems house announced in March (see “Fujitsu adds coherent 40G to FLASHWAVE 7500 ROADM”). In something of a surprise, Cisco sources say the company plans to continue to support CoreOptics' existing 10G and 40G customers (see blog post for more).

"With this acquisition, Cisco reinforces its commitment to continue to invest in its core networking business and to deliver IP next-generation networks at 100 Gbps and beyond," said Surya Panditi, vice president and general manager, Cisco's Service Provider Access and Transport Technology Group. "We are focused on continuing to deliver an industry-leading portfolio of routing, switching and optical transport systems that enable our service provider customers to better address the ever-present business challenge of managing tight capital and operating budgets while accommodating the tremendous growth in network traffic."

Responding to Lightwave questions, Cisco spokeswoman Robyn Jenkins Blum added, "CoreOptics’s technology could be used on any Cisco product with 10/40/100G interfaces. Cisco is also investigating other potential applications of the technology."

Cisco plans to add CoreOptics employees to the Cisco Service Provider Technology Group. They will work with Cisco's existing optical engineering teams in Monza, Italy; Bangalore, India; and Richardson, TX.

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