Analysts say that both IBM and JDSU should profit from the deal. "Although we feel the price tag was not a bargain basement price (we estimate 4.5X sales), overall, we like the transaction!" writes James Jungjohann of CIBC World Markets in a note today.
He and his colleagues say the deal expands JDSU's market reach and brings it packaging expertise and access to a valuable IBM circuit design team with expertise in silicon germanium and CMOS.
As a result of the acquisition, about 115 employees, most of them in Rochester, Minn., will be joining JDSU while staying in their present digs.
JDSU has several reasons for wanting this deal. First, it plans to expand its product portfolio. Today, JDSU's product line addresses optical networking in the telecommunications arena. This acquisition would make JDSU a supplier of enterprise optical networking components, such as those for Fibre Channel and Ethernet devices. And considering the overall economic climate in the telecom market, any new way to make money is welcome.
JDSU also plans to use IBM's component packaging know-how to combine its products and enter new markets. Specifically, JDSU plans to add its own lasers, modulators, and drivers to the optical semiconductor chips from IBM, in order to create so-called multirate transponders for use by SAN and LAN OEMs.
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