Nortel Steps Into MEMS Switching With Xros Acquisition

Nortel Networksromechanical systems (MEMS) technology was one of the top stories of last week's Optical Fiber Communications (OFC) Conference (Baltimore; March 5-10), as company after company touted switching systems based on the technology. As if anyone needed verification that MEMS switching presents a viable technology, <%=company%> (Brampton, ON) came home and ponied up $3.25 million in stock for Xros (Sunnyvale, CA).

Xros is developing silicon-based micro-mirror technology for optical switching. Nortel hopes to leverage the technology to achieve an all-optical network. The switching prototype is reportedly capable of arbitrarily connecting up to 1152 pairs of inputs and outputs with an all-optical pathway from each input to each output. The all-optical pathway makes the cross-connect completely independent of the transmission speed (bit rate) of the data and the underlying format or protocol of the data.

The transaction, which is expected to close in the second quarter of 2000, is subject to customary regulatory approvals and the approval of Xros' shareholders. It is expected to be slightly dilutive to Nortel Networks earnings per share in calendar year 2000 and accretive in calendar year 2001 (excluding acquisition-related charges). Based upon a determined price of Nortel Networks common shares of approximately US$118.12, the acquisition will result in that company issuing approximately 27.5 million shares on a fully diluted basis.

Look for a technical piece overviewing MEMS at OFC '00, both in the exhibit hall and in the technical sessions.

Edited by Kristin Lewotsky