Lucent today said it would acquire Nexabit Networks, a privately held start-up developer of terabit routers for the Internet.
The deal is valued at $900 million. Nexabit, based in Marlborough, Mass., was founded in 1997 and employs more than 120 people.
Nexabit adds a high-speed router for the Internet core to Lucent's data networking portfolio, which also includes Lucent's own PacketStar and Ascend's GRF gigabit routers. Ascend is the IP access and ATM switching powerhouse that Lucent finished acquiring this week.
These devices will sit at the edge of a service provider network, feeding data to the Nexabit NX64000 in the core, observers say.
"This merger gives Lucent not only a leading product for ultra high-speed IP core networks, but a terrific lead in delivering terabit-speed switch/routers that connect directly to optical networking systems," Curt Sanford, president of Lucent's new InterNetworking Systems (INS) unit, said in a statement.
INS, which is anchored by the former Ascend, was created the day before the Nexabit acquisition.
INS in turn becomes part of Lucent's now giant Broadband Networking group, headed by Lucent Chief Operating Officer and Bell Labs Chief Dan Stanzione. Broadband Networking also includes Lucent's LAN switching division, but overall it seems dominated by carrier-class products.
The moves create the second reorganization of Lucent's data side this year, and analysts will be watching closely to see if that slows any of the company's momentum.
"Convergence, now that it's becoming real and not just a theory, is harming organizational charts," says Peter Bernstein, president of Infonautics Consulting in Ramsey, N.J. Bernstein is also a long-time Lucent-watcher.
One factor in Lucent's favor: Unlike some other companies it has successfully retained most of the top executives from past acquisitions. Indeed, Nexabit Founder and CEO Mukesh Chatter will become vice president of Advanced IP Core Technologies in Lucent's new INS group.
Personnel synergies aside, Lucent and Nexabit already have some existing technology linkage. The companies have an agreement to integrate Lucent's Dense Wavelength Division Multiplexing (DWDM) optical components into Nexabit products. The joint work will enable Nexabit products to provide integrated switch routing of IP traffic directly onto a DWDM optical core network at 10G bit/sec per wavelength, Lucent claims.
The Nexabit NX64000 supports IP, ATM, and Frame Relay and MPLS. The router is in beta trials with several service providers, including Frontier Communications, Road Runner and OneNet.
Lucent joins rivals Nortel, Siemens and Ericsson in snapping up high-speed router start-ups to prepare for the Internet data networking bandwidth explosion and future voice/data convergence applications. Siemens recently acquired Argon Network, while Ericsson purchased Torrent Network Technologies.
Nortel, meanwhile, has a 20% stake in Avici Systems.
Lucent expects the transaction to be completed by July 31.
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Contact Senior Editor David Rohde
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