Frost & Sullivan Market Insight   Published: 3 Aug 2005
JDS Uniphase to Acquire Acterna
Date Published: 3 Aug 2005

Ayshwarya Deepak, Research Analyst

Broad Overview of the Acquisition

Mergers and acquisitions have become the order of the day in the communications test and measurement industry. Recently in May 2005, JDS Uniphase corp. (JDSU) a leading provider of optical communication components announced its acquisition of Acterna Corp., one of the world’s largest provider of communications test solutions for telecommunications and cable network operators. The acquisition deal was finalized on August 2005 and is worth $450 million in cash and 200 million shares in stock. This article aims to highlight the impact of this acquisition for JDSU by providing an outline of the companies, its focus, growth strategy and the advantages of this deal for JDSU going forward.

Acterna - Overview

Acterna was formed in May 2000 from the merger of Wavetek Wandel Goltermann (WWG) and TTC, and is headquartered in Germantown, Maryland, USA. Together, they have over eight decades of experience in the communications test industry, as WWG was founded in 1923 and TTC in 1974. While WWG was a leader in the research and development (R&D) and manufacturing test solutions space, specializing in the fiber-optic and access networks, TTC was renowned for its hand-held and portable installation and maintenance (I&M) test equipment.

In 2002, Acterna operated in multiple segments of the telecommunications and data communications test equipment industry including fiber optics, synchronous optical networks/synchronous digital hierarchy (SONET/SDH), asynchronous transfer mode (ATM), voice over internet protocol (VoIP), and digital subscriber line (DSL). In 2002, the economic downturn saw Acterna file for bankruptcy however it rebounded quickly and completed its restructuring by October of the same year. One of Acterna's strengths is the strong, long-standing relationships it enjoys with its customers around the world. As a result, it is able to direct its product development activities to ensure that the portfolio of test instruments and systems is aligned with the particular challenges and needs of its customers.

Acterna has a global presence in almost 160 countries including Germany, Hong Kong and more than 40 percent of its revenues is generated from outside North America. Acterna has about 1,770 employees and revenues of $440 million for the year ended March 2005. SBC communications this year also recognized Acterna as an outstanding supplier to Internet service providers. Acterna’s product portfolio covers a wide range of communication technologies from VoIP, GbE, fiber access, wireless, etc. One of its key strengths is its technical sales force in 31 countries and distributors in 64 countries. Some of its flagship products include NetComplete Metro Ethernet Service Assurance solution, digital broadcast test and troubleshooting platforms (DTS-330 and DTS-200), Ethernet and Fiber Channel services module (FST-2802) and MTS-8000 scalable optical tester. Through its strategic alliance program, Acterna has acquired strategic partners including SBC communications, Cisco Systems, Alpha Technologies, Granite Systems, Telamon Corporation, Motorola, Tollgrade Communications. Inc.

JDSU Overview

Headquartered in San Jose, California USA, with about 5,600 employees, JDSU is a worldwide leader in optical technology, designs and manufactures products for fiber optic communications. (JDSU) is a world leader in designing and manufacturing fiber optic communications equipment. The testing instruments produced by JDSU are used in research and development, manufacturing optical components, system development and network maintenance.

JDSU’s expertise is its technical expertise with which it has built its optical methodology over the last 15 years. It has a very broad range of active component source lasers, modulators, and switches which form the basis of many of its transmission products and on the other hand it also has years of experience in micro-optics and passive components which is now leveraged into a whole range of advanced optical modular products. It offers a whole range of communication components, communication modules and subsystems, communication instrumentation and commercial lasers. JDSU products focus on modularity and scalability and the Multiple Application Platform (MAP) product line provides a setup that can service the customers through the testing life cycle right from R&D to full production. As the focus is currently on its acquisition of Acterna, a few key mergers and acquisitions are highlighted below:

April 2005: JDSU acquired Lightwave Electronics Corporation

a leading provider of solid-state lasers for commercial markets and this move strengthens JDSU’s position in the growing laser markets.

August 2004: JDSU acquired Advanced Digital Optics, Inc. a company that designs and develops light engines used in projection displays. This move clearly strengths its position in the design and manufacturing of micro display light engines. UltreX™, and DefiniTV™ light engines are examples of products that were born out of this consolidation.

May 2004 : E2O Communications, Inc. manufactures optical transceivers to support Fast Ethernet, Gigabit Ethernet was acquired by JDSU. This provides a new customer base to JDSU and strengthens its position in optical data communication market.

Apart from the ones highlighted JDSU has also had other acquisitions like LA Label in 2003, Scion Photonics, Inc. in 2002 , Optical Process Automation, Inc. in 2001, Casix Laser, Inc. in 2000, Oprel Technologies Inc. ,AFC Technologies in 1999

Acquisition Benefits to JDSU

Chart 1.1 highlights the benefits of this acquisition for JDSU.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conclusion

Going forward, in this deal Acterna CEO John Peeler would remain with JDSU to head the newly formed communication test and management product group. JDSU has believed that creativity is important while addressing customer requirements. Hence it makes sense for the customer’s point of view, that vendors work together, where one of them provides a part of the test solution and the other provides the other part of the test solution rather than either company trying to propose a non-optimum test set up. As a strong demonstration of its commitment to its principle of addressing customer needs most effectively, JDSU has recently added Acterna to its portfolio of acquisitions.

For questions, comments on this article, contact the author, Ayshwarya Deepak at adeepak@frost.com.

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