So, rumor duly squashed. However, it's worth examining why it sounded credible in the first place.
For a kickoff, it's thought that Emulex, which makes adapters for storage-area networking, has been looking for years to buy a transceiver outfit of its very own; and Finisar, which makes a range of data comm transceivers, fits the bill. The consultant that started the latest rumor says Emulex already passed on the chance to buy Stratos Lightwave Inc. (Nasdaq: STLWD) months ago. Now, with its eye on 10-Gbit/s Fibre Channel, Emulex could be more ready than it's been in the past (see Xilinx, Emulex Create 10-Gig FC and Emulex Cooks Up 10-Gig FC Demo).
Finisar, however, wouldn't be a bargain to buy. It has a market cap of $289.8 million and $112 million in cash at the end of last quarter. Finisar also has about $125 million in debt. "They'd have an enterprise value of about $310 million -- that's what a company would have to pay to take them over," says one financial analyst, who also spoke on condition of anonymity.
Could Emulex have afforded it? Its last quarterly report boasted revenues of $70.4 million, up 34 percent year-over-year (see Emulex Q1 Profits Rise). And with about $322.2 million in cash on hand, the company certainly seems to be doing better than some in the industry.
Still, would such a buy have been wise? Some have their doubts. "The downturn has marked a profound change in the component business. Transceivers have become commoditized, everything's going to China," said the consultant quoted earlier. He says companies such as Finisar, Optical Communication Products Inc. (OCPI)
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