Would Nokia Sell AlcaLu’s Optical Landline Business?

May, 2015

A few years ago, Nokia decided to unload NSN’s optical networks division to focus more on the wireless sector. Now, with the proposed acquisition of Alcatel-Lucent, it will be entering the fiber optic business once again, only this time taking on a comparatively gigantic piece of the pie. While there would be some potentially attractive aspects of the product line including for backhaul applications, it would not be completely surprising if Nokia were currently thinking about divesting the entire optical segment down the road because the market has only worsened since its sell-off to Marlin Equity Partners. The expected spinoff of the submarine optics portion of the business makes the remaining product line even less desirable because as a general rule, the margins tend to be much higher with subsea because in cases of new construction, customers require a full turnkey job including...

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Avago’s Spinoff of Optics in Short Term?

August, 2015

While for now, Avago Technologies will be preoccupied with the immense and time-consuming effort of its integration process with Broadcom, not too long afterwards, it would not be surprising if there would be a spin-off that would include a large number of the combined company’s optical networking assets. The progressive shift from a technology-focused firm to one that is more business-oriented should inevitably go beyond just making further sizable acquisitions, but to improve the balance sheet through aggressive divestment. Although KKR does not hold a stake in Avago anymore, we believe the supplier has been heavily influenced by the private equity firm’s modus operandi – purchase assets, find value, package parts, and sell off. One may easily presume that calling the merger, “Broadcom” instead of “Avago” probably has significance for its future technology direction....

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Verizon Comes to Senses With XO Fiber

March, 2016

Late in 2015, Verizon was apparently considering a terribly reckless action involving ridding itself of its invaluable enterprise properties. The purchase of XO’s assets definitely indicates a reversal in this line of thinking. Nevertheless, the industry discussion of this acquisition, which Verizon bought at a very attractive price, has not concentrated enough on the blatantly important on-net connections with businesses, but on other seemingly less vital considerations, including in support for future 5G applications, which are hardly around the corner, in what at least partially appears to be in order for top-level, wireless-centric executives at the large service provider to save face. There definitely seems to be an excessive preoccupation in the investigation of this buyout on backhaul/fronthaul applications as well as on spectrum. One may presume that Verizon could have rented...

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AT&T's "Open ROADM": More Skepticism

April, 2016

In defiance of AT&T’s uniquely leviathan network involving layers of infrastructure built over many years, the service provider continues to promote further leading-edge concepts that would ostensibly change the fundamental nature of its cost structure as well as its spider web of operational entanglements. These major shifts have been projected to occur in an immense way a long way down the road, whether it was getting to all-IP by 2020 (somehow in 2012, all of the T1s would be expected to disappear and OTN would cease to becomes a reality), and in 2014, it projected that over 75% of its network would be software-centric by the end of the decade. AT&T’s latest scheme was introduced at OFC 2016, the "Open ROADM", and while also based on the notion of "software control," it brings in the idea of "open hardware" or Open Line Systems (OLS) in which Verizon, at the same conference,...

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Acacia’s Valuation: The Street’s Cruel Joke

August, 2016

While Acacia Communications’ recent business performance has been impressive, and deserves to be rewarded, there can be no justification for a market cap that comes even close to exceeding the valuations of either Finisar or Ciena. With the limited number of tech IPOs, it appears that some institutional investors have constructed a mini-bubble based on just one optical company to quickly grab some profits before the economy in general is likely to take a steep nosedive. The IBD's 14-company Telecom-Fiber Optics industry group reached a 15-year high, of course, going back to the end of the last major bubble, after the financial community decided to treat the historically, conservatively-minded service providers, as if they would need bandwidth for an indefinite amount of time. The optical industry is still paying the price to this day for the results of overcapitalized vendors and...

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