Ex-Canadian tech giant makes acquisition here

Eleven years ago, JDS Uniphase Corp. was a big name among Canadian IT companies, an optical network equipment maker with 10,000 employees around the world.

Then the dot-com bubble burst and it lost tens of billions of dollars, shrunk to less than a thousand workers and shifted its headquarters from Ottawa to California.  Over the years it has been rebuilding itself, while still maintaining operations here.
On Thursday it expanded its presence in this country a little more by buying Dyaptive Systems, a Vancouver-based company that makes systems for testing the capacity of cellular networks, for an undisclosed price.

“Dyaptive gives us a chance to grow our portfolio in the wireless space,” said Jon Pelson, (pictured) wireless segment leader at what is now called JDSU. “We saw it as giving our customers [network equipment makers and wireless carriers] a broader set of solutions.

Instead of being a point solution, Pelson said, Dyaptive systems will be sold as an end-to-end solution with other JDSU test equipment.

Dyaptive, which has only 40 employees, will be able to take advantage of the broader reach of JDSU, which has grown to US$1.8 billion in revenue and has 5,000 employees around the world.

“You can’t just walk into a major service provider and say ‘Here’s our stuff,’ said Pelson. But “we sell to everybody. So for Dyaptive it means their products are going to be in front of every major equipment maker and service provider in the world.”

The new owner plants to retain all of Dyaptive’s staff and its Vancouver offices.

JDSU [Nadaq: JDSU; TSX: JDU] still makes optical communications components bought by network equipment makers and carriers, but it also has a network test and measurement division, largely for Ethernet and cable networks. The Dyaptive aquistion broadens its test solutions for 3G and 4G wireless networks.

In particular, Pelson said, Dyaptive has what no other company has – a way to simulate high volume data traffic. While some network equipment makers test their networks with banks of 50 handsets testing a handful of applications at a time, Dyaptive’s software-based DMTS systems can simulate thousands of connections at a time.

The difference is crucial to an operator, he said.

“It’s my experience that a lot of these new apps work great in the lab, they work in the field trial but when you issue one instead of 8,000 downloads you get 800,000. Under a true heavy load suddenly it’s not working so good.”

The DMTS can simulate FTP, HTTP, email, voice and video communications.

In addition to test systems created by network equipment makers like LM Ericsson, Nokia Siemens Networks and Alcatel-Lucent, Aeroflex Inc. of New York is a major competitor.

A rack-sized Dyaptive system, which includes processing cards that run the simulations software, range from $300,000 to over $1 million. Two unnamed Canadian carriers are among the customers.

Dyaptive CEO Joe Sutherland said the company was founded around 2003 by seven engineers, many of whom worked for the Philips Electronics N.V. design centre in the Vancouver area. Their first sale was to Nortel Networks.

It has survived on sales and financing from two venture capital firms.

Sutherland, who has experience in the test and measurement industry, joined about three years ago. He said he and JDSU began talking about an acquisition off and on starting a year ago, but the negotiations “heated up last summer.”

As a small company, Sutherland said, Dyaptive sometimes had to make difficult choices between spending on the product or on marketing to reach more customers. That should now be resolved and he expects to be hiring.

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