Hoping to broaden its reach into the broadband-equipment market, C-COR.net
Corp. has snapped up Royal Philips Electronics' Philips Broadband Networks
division for approximately 80 million Euros -- equaling roughly $79 million at
current exchange rates -- and the assumption of certain liabilities.
PBN designs and sells transmission products for broadband networks, including
transmitters, receivers, optical nodes, network amplifiers,
dense-wave-division-multiplexing products and network-management systems. The
500-employee unit has a significant customer base in Europe and Asia, with
production facilities in Manlius, N.Y.
C-COR.net chairman and CEO David Woodle said PBN brings a full line of
transmission products focused on the international marketplace. In particular,
PBN's product line includes valuable segmentable optical nodes 'that will add
nicely to our product family,' Woodle noted.
'Their wave-division-multiplexing solutions are not only very strong, but
complementary to our high-density platform, and by adding together the
technologies, it will allow us to really provide a complete systems solution to
our customers much sooner than we could have on a stand-alone basis,' he
added.
Once the deal is finalized by the end of this year, the acquisition will
triple C-COR.net's international business, Woodle said.
C-COR.net will have to spend about 2 cents to 3 cents in earnings per share
for the next two quarters to integrate the two companies, but upon completion,
it will add more than $100 million in new business per year. Woodle said there
would be some restructuring as duplicate positions are eliminated.
The acquisition comes as C-COR.net is girding for a financial hit in lost
revenue due to Adelphia Communications Corp.'s bankruptcy. Adelphia was
projected to make up 10 percent to 15 percent of C-COR.net's business through
this year, and it has some $41 million in unpaid bills for gear it has
purchased.
Woodle said C-COR.net will have to take a charge for the outstanding accounts
receivable, and it could be as high as the full $41 million. But he noted, 'Most
people believe that based on the current assets, we will collect a portion of
that, and at a minimum, we will get a tax refund of up to $10 million based on
writing off that debt.'
