11:07 AM EST Fri., June 25, 1999
Lucent Technologies continues its march along the acquisition trail, this time snapping up a start-up maker of next-generation routers, Nexabit Networks, for about $900 million.
Lucent revealed the acquisition just one day after closing its deal with Ascend Communications. Nexabit, Marlborough, Mass., is one of a few small companies focused on building terabit routers, which are giant routers that go into the core of an ISP's backbone.
Other examples are Avici Systems, North Billerica, Mass., Argon Networks, Littleton, Mass., and Pluris Inc., Cupertino, Calif. Nortel Networks Corp. owns a position in Avici, and Argon was acquired earlier this year by the Unisphere Solutions Inc. division of Siemens Information and Communications Networks Inc., Boca Raton, Fla.
"This is another example of Lucent understanding what its own limitations are in going after the next generation of carrier networks," said Jim Slaby, an analyst at Giga Information Group, a Cambridge, Mass., consulting firm. "They buy a promising, though unproven, start-up hoping to get a quicker time to market."
There are requirements for high-speed interfaces, in terms of throughput and reliability, that simply cannot be addressed with the current generation of routing technology from the traditional giants such as Nortel Networks or Cisco Systems Inc., Slaby said.
"Even their largest routers are not a long-term solution for what carriers need for IP routing," Slaby said.