The acquisition of Ascend by Lucent has put a premium on the remaining wide area networking (Wan) vendors as consolidation continues to carve up the industry.
Top of the list are ATM switching vendors Newbridge Networks and Fore Systems.
Said Paul Silverstein, senior communications equipment analyst at Banc Boston Robertson Stephens, ?I don?t see Newbridge being taken up over the next 30 to 60 days, but there is a fair chance that one of Lucent?s competitors, Ericsson or Siemens, may acquire it.?
He continued: ?The company is executing well and its core business is strong which would of course make it attractive for a third party.?
Jim Slaby, Wan analyst at Giga Information, believes Newbridge is up for sale even though its top executives may publically claim otherwise. Again, Lucent?s rivals are would be suitors.
?Newbridge and Alcatel would be a reasonable fit as Alcatel divests from its non strategic business. It also has a reasonable presence in North America,? he said.
Newbridge has fuelled speculation of a purchase by recently shedding three firms from its startup programme. Observers speculate this is part of the organisation?s scheme to clear the decks of non core interests to make it attractive for potential buyers.
The company dsmisses the claims as coincidences. Chris Albinson, assistant vice president of the affiliate programme said the startups are either sold, floated, or purchased by the company. The three startups had matured and were sold just as the industry approaches consolidation fever.
If the speculation were true, ?I?d be selling off startups that are one or two years old. It takes startups between four and seven years to reach exit point. The companies we sold were between four and six years old,? continued Albinson.
Newbridge ensures it can still resell the products from the three firms even though they were sold to rivals. The companies are remote access company, ACC which was sold to Ericsson, voice over IP developer Vienna, now owned by Nokia, plus fibre optic specialist Cambrian, now in the Nortel fold.
Newbridge has invested $130 million in the scheme since its was created five years ago, taking a 30 per cent stake in each of the 23 companies involved. Albinson claims a 56 per cent rate of return.
?A top rate venture capitalist would see a 25 per cent rate of return,? he said. Newbridge is due to float PCI to VME bus bridging chipset firm, Tundra and recently acquired voice over frame relay startup, Castleton. Albinson said Newbridge is looking at signing up 10 more startups over the next 10 years.
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