Nortel Networks acquires CoreTek

Nortel Networks Corp. continued its shopping spree last month with the acquisition of Wilmington, Mass.-based CoreTek Inc., an optical component manufacturer. This purchase follows closely behind Nortel’s purchase of optical networking company Xros Inc. in March, as well as the acquisition of Qtera Corp. last year.

The US$1.43-billion agreement is expected to close in the second quarter of the year.

“I would position this as the third piece of the puzzle,” said Dan McLean, an analyst with IDC Canada Ltd. in Toronto. “(The purchases) all had to do with fairly leading edge, fairly innovative fibre-optic technology, and this is once again one of those types of acquisitions where it looks like they’re really looking to beef up their whole innovation in fibre optics.”

CoreTek specializes in tunable photonics and makes components such as tunable lasers. Peter Allen, vice-president of business development for Nortel, explained the reason behind the acquisition was to extend Nortel’s leverage in the optical Internet market.

“If you look at some of the previous acquisitions that led up to that (CoreTek), we were trying to build certain capabilities,” Allen said. “Here we think the next-generation optical components, and in particular tunable lasers, will be important in building that network.”

The CoreTek technology integrates a micro-electromechanical systems (MEMs) technology, explained Tom Dudley, vice-president of marketing for CoreTek. “To put it very elementarily, it’s really just a little tiny machine that you’re able to fabricate with very small features on silicon.”

Tiny mirrors are used to alter light’s wavelengths in real time. It’s not a new technology, but Dudley said CoreTek was one of the first to find an application in telecommunications for it. “The unique feature about our implementation of this MEMs technology is that we are integrating it directly on a laser,” which means the wavelength emitted by the laser can be adjusted or tuned.

With the tunability feature, routing

problems are simplified, Dudley said.

The tunable lasers have a number of ways of adding flexibility to the network, Nortel’s Allen added.

“In today’s network they can bring improved supply-chain responsiveness, if you can imagine, as we build out the number of wavelengths on any one fibre in anybody’s network,” he said.

The components from CoreTek are designed to operate in 10Gbps systems — the Nortel standard.

Allen said he expects tunable capabilities to be integrated into parts of Nortel’s OpTera family of products, and he added the application of tunability doesn’t have restrictions in one part of the network over the other.

“I think we’ll see tunability providing flexibility in dynamic types of networks and in all our product range over time,” he said.

Nortel has an internal tunable laser program, and new products should be available early next year.

IDC’s McLean said he sees this as more of a strategic type of purchase rather than a tactical one.

“This isn’t necessarily technology that anyone is going to buy tomorrow, but given a couple of years out, this is probably going to be really, really important stuff as carriers continue to build out their fibre-optic networks and look to enhance those in terms of creating better performance, and doing much broader deployment,” McLean explained.

Dudley said for CoreTek it’s pretty much business as usual. “The intention from Nortel is to have us grow, get our current products to market, and I’m sure they’re going to help us get other products to market. I don’t see many changes happening.”

Nortel, meanwhile, will continue to look for opportunities to strengthen its portfolio and ability to bring “an enhanced value proposition” to its customers, Allen said.