NeoPhotonics goes deep into ROADMs with two acquistions

June 19, 2006 San Jose, CA -- Editorial Director Stephen Hardy reports that NeoPhotonics extended its ROADM capabilities and did its part for industry consolidation with the acquisition of LightConnect Inc. and Optun Corp. The former provides MEMS capabilities that will lead to a wavelength-selective switch (WSS); the latter adds to NeoPhotonics' already extensive expertise in planar lightwave circuit technology for two-degree subsystems.

June 19, 2006 San Jose, CA -- NeoPhotonics extended its ROADM capabilities and did its part for industry consolidation with the acquisition of LightConnect Inc. and Optun Inc. The former provides MEMS capabilities that will lead to a wavelength-selective switch (WSS); the latter adds to NeoPhotonics' already extensive expertise in planar lightwave circuit technology for two-degree subsystems. Terms of the acquisition were not announced, other than it involves both stock and cash.

The company also received additional investments to make the deal happen and to leverage the results.

Tim Jenks, CEO of NeoPhotonics, says his optical component and subsystem company had already developed some ROADM subsystem technology and had worked with the two companies with separate customers. "We've had a number of conversations with Optun over the last year or two and actually with LightConnect over three years about various activities that were of mutual interest," he says. With his company enjoying what he called "a significant growth ramp" in the long-haul and metro transport sectors, Jenks saw an opportunity to continue that momentum by addressing requirements for ROADM subsystems.

"In the case of metro ROADMs and two-degree ROADMs, OpTun really had a superior product and a very novel set of technologies that were a complete hand-in-glove fit for the activities that Neo was pursuing," Jenks explains. Meanwhile, LightConnect had demonstrated an ability "to be a best-in-class performer" in the quest for higher-order products and additional customer traction.

OpTun will bring its low-power, PLC-based Switch-VOA-Tap (SVT) module to NeoPhotonics. LightConnect's MEMS technology has found expression in such products as variable optical attenuators (VOAs), blockers, dynamic gain equalizers (DGEs), and dynamic channel equalizers (DCEs). NeoPhotonics will combine these technologies with its PLC-based mux/demux and related technology to create two-degree and multi-degree ROADM subsystems. However, Jenks predicted it will be "months" before any such products will reach the market, particularly the potential WSS.

Meantime, the combined entities will enjoy extended customer reach. Looking at what Jenks called "the top 10 customers," none of the three companies had traction at all of them; LightConnect probably had the most extensive reach across this list, Jenks conceded. Similarly, while NeoPhotonics has achieved much of its success in North America and Asia, LightConnect has done well in penetrating the European market, Jenks says.

The chief executives of OpTun and LightConnect will join NeoPhotonics. Erez Avidan-Antonir, CEO of OpTun, will work to develop subsystems that combine the capabilities of his old company with those of his new one. Sushil Shah, CEO of LightConnect, will operate MEMS-related business, which will continue to carry the LightConnect name for the time being.

Simultaneously with the acquisitions announcement, NeoPhotonics also revealed it has completed an equity financing round of more than $50 million. New investors International Finance Corp., Needham Capital Partners, DuPont Capital, Shanghai Industrial Holdings, and Mitsubishi Capital joined existing investors Oak Investment Partners, Draper Fisher Jurvetson, ATA Venture Partners, Masters Capital, Harris & Harris Group, and "others" in the round. The cash infusion helped to fund the acquisitions and will help the company leverage its new assets, Jenks says.

NeoPhotonics also announced it has acquired 25 MEMS patents from MEMX Corp.

-- S. Hardy

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