Industry Update

June 1, 2003

Ireland's minister for Communications, Marine, and Natural Resources announced the start of the Limerick Metropolitan Network, part of the Government's Metropolitan Areas Network Programme. The Limerick project is part of a EUR65-million, 19-town national broadband initiative that is 90% funded by the government under the National Development Plan 2000-06 and co-funded by the European Union under the European Regional Development Fund. The EUR5-million Limerick project involves the installation of a 44-km underground fiber-optic ring in Limerick city and the surrounding area. The cable ring will provide a backbone Internet network into which service providers can link to provide a range of high-speed services to businesses, homes, schools, hospitals, and other users. The project is due to be completed in May 2004.

·SBC Services, an SBC Communications (San Antonio, TX) company, approved the FLASHWAVE 4500 next-generation multiservice optical transport platform from Fujitsu Network Communications (Richardson, TX) for network deployment. The agreement will enable SBC to efficiently provide scalable SONET across its networks and deliver Ethernet services. SBC will use the NETSMART 1500 element management system and FLEXR GT craft interface tool to turn-up, provision, monitor, and manage its entire network of Fujitsu platforms.

·Finisar (Sunnyvale, CA) will acquire privately held Genoa (Fremont, CA). Founded in 1998, Genoa has developed linear semiconductor optical amplifiers for amplifying DWDM wavelengths for both metro and telecommunications applications. As a byproduct of that technology, the company has developed what Finisar considers a unique approach for making long-wavelength vertical-cavity surface-emitting lasers (VCSELs). With the acquisition, Finisar will gain access to these technologies as well as Genoa's engineering and management group and wafer fabrication facility. Genoa will merge with a wholly owned subsidiary of Finisar, and Finisar will issue approximately seven million shares of its common stock. The transaction has an aggregate value of about $5.5 million.

·Ciena (Linthicum, MD) will acquire privately held WaveSmith Networks (Acton, MA), manufacturer of multiservice switching platforms. Ciena was an investor in WaveSmith's third round of financing and resells WaveSmith's equipment under a previously announced worldwide sales and reseller agreement. WaveSmith will merge into Ciena, and all remaining outstanding shares of WaveSmith common and preferred stock will be exchanged for about 36 million shares of Ciena common stock. The aggregate value of the shares to be issued by Ciena for this acquisition is approximately $158 million, which is net of the return on Ciena's original investment in WaveSmith resulting from the merger. Meanwhile, WaveSmith announced a multiyear contract with SBC Services for the WaveSmith Networks DN 7100 multiservice switch, which will be used for DSL aggregation across 200 nationwide sites.

·CNT (Minneapolis) signed a definitive agreement to acquire Inrange Technologies (Lumberton, NJ), developer of high-availability Fibre Channel switching for enterprise connectivity and storage networking, in an all-cash transaction valued at about $190 million, or $2.31 per Inrange share. CNT and SPX (Charlotte, NC) have entered into an agreement whereby SPX will sell its approximately 91% interest in Inrange to CNT. The remainder of the shares will be acquired at the same price by a merger immediately following the acquisition from SPX. The boards of directors of CNT and SPX have unanimously approved the agreement.

· The CM-100 packet add/drop multiplexer transport systems for metropolitan networks from Corrigent Systems (San Jose, CA) completed the Telcordia OSMINE Services process for the Telcordia TIRKS and NMA systems. Completion of the OSMINE process is required before deployment of network equipment by most RBOCs. Corrigent Systems also announced an agreement with Lucent Worldwide Services whereby Lucent will provide installation and support for Corrigent's family of CM-100 products. Lucent will provide services such as site surveys, equipment installation, and final acceptance testing.

·Mitsubishi Electric & Electronic USA (Sunnyvale, CA), has established the Semiconductor Division to provide compound semiconductors in discrete and module form for optoelectronic and microwave/radio-frequency customers based in North America. The new division will remain headquartered in California's "Silicon Valley" area and provide marketing, sales, and application engineering support. Regional sales offices and third-party sales and distribution channels will also be located throughout the United States and Canada.

·EXFO Electro-Optical Engineering (Quebec City) has received a $1.6-million order from "a prominent tier one network service provider" (NSP) for predominantly protocol layer test equipment. The NSP purchased 2.5- and 10-Gbit/sec SONET/SDH testers as well as optical time-domain reflectometers, which are contained inside EXFO's FTB-400 field-testing platform, and optical loss test sets to ensure the integrity of its high-speed optical networks.

·FiberCore (Charlton, MA), manufacturer and global supplier of optical fiber and preform for the telecommunications and data communications markets, received a new patent from the U.S. Patent and Trademark Office. The patent is the second to be issued that covers the company's new Plasma Outside Vapor Deposition (POVD) technology, which can be used to manufacture part or all of an optical-fiber preform at a significantly lower cost. The company has corresponding patent applications in several foreign countries and expects that counterpart patents will be issued in the near future. Certain aspects of the POVD implementation process, which had been delayed for financial reasons, are expected to go into production in the first half of this year at the FiberCore Glas facility in Jena, Germany.

·Inplane Photonics (South Plainfield, NJ), developer and manufacturer of integrated optical components and subsystems, has received the second tranche of its first round of funding from current investors Morganthaler and Jerusalem Venture Partners, plus a lease line from Comerica, which closes the round at a total of $30 million. These funds will enable the company to operate "well into the year 2005," according to Inplane.

·Lucent Technologies (Murray Hill, NJ) revealed that LightRiver Technologies (Lafayette, CA), an Accredited Optical Business Partner in North America, has recently delivered the Metropolis DMX access multiplexer to two new customers in the United States. The Metropolis DMX family is a suite of next-generation optical-networking products. The most recent Metropolis DMX sales include agreements with Matanuska Telephone in Alaska and Sierra Pacific Communications in Nevada. Mantanuska is using the DMX, DMXpress, and DMXtend to enhance its interoffice and access network and deliver traditional voice services to its customers. Sierra Pacific is using the Metropolis DMX to deliver TDM and Ethernet services to wholesale carriers throughout Nevada.

·LxSix Photonics (Montreal), privately held designer of new photonic processes and manufacturing technologies for advanced optical components, has begun shipping products and providing services to the telecommunications industry. LxSix has developed what it describes as a highly automated laser processing technology, called Write-On, that enables mass production and automation of optical components. In particular, the company's technological platform manufactures Bragg gratings on various guided mediums, from fiber to optical devices, to ultimately planar waveguides and wafers. The technology is being leveraged to develop, with partners, new integrated optical components.

·Applied Fiber Telecommunications (Albany, GA) placed an order for a Gemini-Cx machine from Sagitta (Hauppauge, NY) to enable high-yield, consistent manufacturing of fiber-optic connectors. The system was shipped directly from March's OFC show in Atlanta, marking the urgency for value-added manufacturing in the challenging environment of high-mix/low-volume production. The system's configuration includes five polishing stations with automatic abrasive changing, high- and standard-volume fixturing, three integrated cleaning stations to avoid cross-contamination, and automatic end-face visual inspection to reduce operator-driven yield variations.

· The local service companies of SBC Communications (San Antonio, TX) enhanced the features and widened availability of its Multi-Service Optical Networking (MON) offerings to provide businesses with an efficient and scalable way to connect mainframes, data centers, and storage networks within a metropolitan area. SBC MON solutions are now available to enterprises that need to connect multiple locations within a city using optical ring configurations. The services use DWDM to enable protocol-independent optical connectivity with bandwidth up to 160 Gbits/sec per fiber pair.

· Scottish Enterprise Edinburgh and Lothian will establish a £4.2-million ($6.75-million) facility dedicated to the commercialization of research in optoelectronics chip packaging. Scottish Enterprise and the European Regional Development Fund will bankroll the facility, which will be located in Livingston. The Scottish Optoelectronics Association will also participate in the center's development. The organizers expect the facility to begin operations this summer.

·Eblana Photonics (Dublin) purchased a laser-diode (LD) attach automated assembly cell from Palomar Technologies (Vista, CA) for use in Eblana's integrated volume manufacturing of laser components for broadband access applications. The cell is expected to completely automate the assembly of LD components into the LD package with 5-µm accuracy.

·Kamelian (Oxford, UK) closed a new funding round involving its existing investors, 3i, Goldman Sachs, and Lightspeed, as well as a new strategic investor, Hoya of Japan. The $6.7-million financing will provide the company with sufficient capital to see it through to its expected break-even point in 2005. Kamelian specializes in the design and manufacture of advanced semiconductor-optical-amplifier (SOA) components. Products range from discrete SOA devices to more complex integrated products based on SOA technologies.

·Marconi's Broadband Routing and Switching Group (Pittsburgh) and Riverstone Networks (Santa Clara, CA) have partnered to deliver carrier class metro Ethernet equipment to telecommunications carriers around the world. The partnership combines Riverstone's IP-based metropolitan routers and carrier class features with Marconi's portfolio of carrier class products, including multiservice switch-routers, optical transport and broadband access systems, and its softswitch. Initially, Marconi and Riverstone will focus their partnership on Europe, the Middle East, and Africa (EMEA). The two companies recently provided Jersey Telecom, a U.K.-based provider, with a converged voice, video, and data network.

·butlerNetworks A/S (Copenhagen, Denmark) is carrying live voice and data traffic on its new optical backbone network built with multiservice SDH equipment and services from Lucent Technologies (Murray Hill, NJ). Cygate Danmark, a Lucent Business Partner, helped butlerNetworks complete the installation of the project for this independent Danish full infrastructure solution and backbone operator in eight weeks. The network is based on Lucent's newest multiservice 2.5- and 10-Gbit/sec SDH Metropolis ADM MultiService Mux.

·WaveCrest Communications (London) agreed to purchase the assets and retain the employees of WaveCrest Communications Deutschland GmbH, formerly Interoute Telecom Deutschland GmbH, which is in administration. WaveCrest Communications operates in Frankfurt, Germany, providing international voice wholesale services to telecommunications carriers. The company plans to combine the wholesale business of WaveCrest GmbH with its existing German wholesale service and further expand in the international wholesale voice termination market throughout Germany.

· Optical-network equipment supplier Fiberhome Telecommunications Technologies (Wuhan, China) will purchase the Agere Systems (Allentown, PA) MARS Lite framers. Agere will provide the new MARS2G5 T LT as well as other MARS devices for Fiberhome's next-generation platform for metro, data, and SONET applications. Fiberhome plans to introduce the multiservice networking platform within the year. Agere has begun providing volume quantities of these chips.

· Daegu Bank and Busan Bank have jointly developed a backup banking system using the ONLINE Metro Multiservice DWDM Transport Platform from Ciena (Linthicum, MD). Daegu and Busan are among the largest regional banking institutions in Korea. Both banks' primary data centers are interconnected with protected full-rate native Fibre Channel links to a backup data center in Milyang city, 90 km away. Using DWDM technology and SAN protocols, the banks expect to dramatically increase backup performance and assurance of business continuity.

·ST Assembly Test Services (STATS—Singapore), independent semiconductor test and advanced packaging service provider, developed a low-cost packaging solution for 10-Gbit/sec applications by optimizing the technical characteristics of the standard laminate PBGA package. The packaging technology was developed jointly with Aeluros (Mountain View, CA), a fabless semiconductor company developing serial 10-Gbit/sec high-density physical layer devices in CMOS. Aeluros will use the new packaging technology in its devices.

·Lucent Technologies (Murray Hill, NJ) has signed a contract with Shandong Unicom, a subsidiary of China Unicom, to build a high-capacity optical network in Shandong Province. Under terms of the contract, Lucent will provide the LambdaUnite MultiService Switch, the Metropolis ADM MultiService Mux, and network management systems. The backbone network will connect larger cities like Weifang and Qingdao to other cities in the province. This win marks the first time that the LambdaUnite MultiService Switch will be deployed in a backbone network in China after being deployed in a number of MAN projects with other customers.