US-based Corning Inc., the world“s biggest producer of optical fibre used in fibre-optic networks, announced plans to acquire NetOptix Corp., a maker of components used in devices for boosting the ca…
US-based Corning Inc., the world“s biggest producer of optical fibre used in fibre-optic networks, announced plans to acquire NetOptix Corp., a maker of components used in devices for boosting the capacity of fibre-optic networks, for about US$ 2 billion worth of stock. Corning said the acquisition will help it boost thin-film filter production at its new Samsung Corning Micro-Optics joint venture with South Korea“s Samsung Electronics Co. By using robotics and other automation techniques developed by Samsung, Corning said, the venture is expected to reap benefits in capacity, reproducibility, unit cost and reduced cycle time. Corning did not disclose terms of the agreement with Samsung. The venture, which will operate out of an existing Samsung facility near Seoul, will make components used in dense wave division multiplexers, or, DWDMs. Fibre-optic systems break data into quick bursts of light representing the zeros and ones of computer language – when the light is off, it represents a zero and when on, represents a one. DWDMs place a prism of sorts in front of the light to split it into multiple virtual fibres that can travel down one line. Shares of Corning (GLW) rose on news of the venture, which analysts believe will boost Corning“s position in the rapidly growing field of photonics, the components used in conjunction with optical fibre. Corning said the venture will expand substantially Corning“s DWDM business and will provide a new source of high-quality, low-cost components to Corning“s fibre amplifier business. Volume manufacturing is expected by mid-year. Analysts expect the world-wide market for DWDM components to grow to US$ 600 million this year and to US$ 1 billion in 2001, from US$ 300 million in 1999. Corning“s interest in the DWDM market stems from the concept of a tunable laser, the latest technology breakthrough in the rush to expand bandwidth on the Internet. To meet the needs of the new venture, Corning said it plans to increase its capacity for making thin-film filters by tenfold by year“s end at its facility in in Marlborough, Massachusetts. Once known for its cookware, Corning has used its knowledge of glass-making to transform itself into a fast-growth, high-tech company. Earlier this month, Corning (GLW) announced plans to invest about US$ 750 million to expand its optical-fibre manufacturing capabilities. The company expects the expansion to increase its overall capacity by more than 50%. Corning recently completed its purchase of the fibre, cabling and related hardware businesses of Germany“s Siemens AG. Corning expects the NetOptix acquisition will “mildly” reduce earnings in 2000 but boost earnings in 2001 and beyond, excluding amortization expenses related to the NetOptix deal and other acquisitions. Corning expects to complete the transaction in the second quarter. Separately, Corning said it acquired British Telecommunications PLC“s Photonics Technology Research Center for about US$ 66 million. Corning expects to post a first-quarter charge of about US$ 20 million to US$ 30 million.