OpVista head confirms acquisition talks

Feb. 25, 2009
FEBRUARY 25, 2009 By Stephen Hardy -- OpVista President and CEO Karl May confirmed today that the systems company is in talks to be acquired. However, he denied reports that the company has laid off employees and countered suggestions that OpVista faces imminent financial ruin if the deal doesn't go through.

FEBRUARY 25, 2009 By Stephen Hardy -- OpVista President and CEO Karl May confirmed today that the systems company (search Lightwave for OpVista) is in talks to be acquired. However, he denied reports that the company has laid off employees and countered suggestions that OpVista faces imminent financial ruin if the deal doesn't go through quickly.

As reported yesterday on the Lightwave Blog, Communications Components Analyst Paul Bonenfant of Morgan Keegan & Co. issued a note describing "industry chatter" that suggested that OpVista was in acquisition talks amid signs, including layoffs, that the privately held company was in financial trouble.

While acknowledging the current economic environment, including a credit market he described as "dismal," has affected OpVista, May said in an interview with Lightwave today that the acquisition talks are an outgrowth of the interest shown in his company last year after it released its 40-Gbps CX8 Optical Networking System and discussed details of the Dense Multi-Carrier technology on which it's based.

However, "I don't think any private company in our space has a pretty bright outlook" unless they are profitable or sitting on lots of cash, May commented.

May said that he hopes to successfully complete the acquisition discussions in the "next couple of weeks." He declined to reveal the identity of the other party. He added that while he has not laid off any employees yet, terminations would be likely if the acquisition closes.

Should the acquisition discussions collapse, May said the company has alternatives, citing existing relationships with other companies, including an ODM relationship started last year.

Despite the economy, May characterized OpVista's business picture positively. The company is shipping the CX8 for revenue, including first installations at a "major customer" in North America whose identity he plans to reveal by the end of the quarter. The company is close to another deal with a European customer as well, he believes. He characterized the first half of the year as "pretty good," adding, "We'll hit our number."

The lack of capital should put pressure on the entire systems space, May said. While smaller players such as OpVista naturally face problems, May explained that larger companies with equally large operating expenses could burn through cash reserves quickly. Tight credit will hamper mergers and acquisitions, and therefore May expects there to be relatively few deals. With IPOs off the table, exit strategies for private companies will be limited.

"It's very tough -- I wouldn't kid anybody," May concluded. "We've got a lot of work to do to stay on track and get things done."

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