Cisco Scoops Up Lightwire To Bring High-Speed Optics To The Data Center

by Gaurav Kheterpal on February 27, 2012

2011 was a turbulent year for Cisco as the networking giant was forced to cut jobs and landed in trouble over human rights violation. Things started to turn around towards the latter half of the year as the company’s fourth quarter results beat analyst estimates and CEO John Chambers hailed it as the “Next Cisco” – ‘very focused, agile, lean and aggressive company.’

The networking giant began the New Year on a positive note stating that it “expects to be more active in acquisitions“. And yesterday, Cisco made a comeback to the acquisition game by scooping up Lightwire, an Allentown, Pennsylvania-based company that develops “advanced optical interconnect technology for high-speed networking applications.”

Cisco says it plans to leverage this acquisition to deliver cost-effective, high-speed networks with the next generation of optical connectivity, allowing service provider and data center customers to meet the growing demands of video, data, voice, mobility and cloud services.

Lightwire, founded in 2002, is a specialist in manufacturing optical transceivers using traditional CMOS manufacturing technologies. The company is backed by New Science Ventures, Artiman Ventures and Novitas Capital and considered as a formidable player in the CMOS segment, thanks to its low-power high-speed optical transceivers which can be plugged into switches, routers and other optical transport systems. Cisco will pay $271 million in cash and retention-based incentives for Lightwire.

Cisco currently procures non-optical transceiver components from Finisar. However, with Lightwire in the bag, Cisco could potentially build in-house transceiver manufacturing capability and eliminate dependency on third-party suppliers such as Finisar.

“The acquisition of Lightwire will support our data center and service provider customers as they manage the continuing deluge of network traffic alongside tight capital and operating budgets,” said Surya Panditi, senior vice president, Cisco Service Provider Networking Group. “With the combined know-how from Cisco in silicon design and Lightwire in CMOS photonics, we will transform Cisco’s optical connectivity business to an integrated technology platform that supports our customers’ burgeoning need for cost-effective high-speed networks.”

Analysts believe CMOS technology will play a significant role in the enablement of high-speed networks and this segment could see more M&A activities this year. In July 2010, Cisco acquired Core Optics – another coherent optical transport technology provider before it stalled M&A in 2011 during a lengthy, companywide restructuring effort.

As part of the acquisition, Lightwire will be integrated into Cisco’s Transceiver Modules Group Business Unit and Supply Chain Operations Group. The deal is expected to closed in Cisco’s fiscal third quarter, which ends in April.

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Written by: Gaurav Kheterpal. Follow TheTelecomBlog.comby:RSS,TwitterFacebook, or YouTube.

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