Finisar acquires Honeywell VCSEL business
Following the completion of the acquisition, which is expected to close in the first calendar quarter of 2004, Finisar will continue to operate the business at its current location in Richardson, Texas.
Honeywell s VCSEL Optical Products business manufactures VCSELs which are primarily used in high-speed fiber-optic data communications and position sensing applications. VCSELs operating at 850 nm are used as the light source in datacom transceivers for Fiber Channel, Gigabit Ethernet and other related applications.
Honeywell is acknowledged as the largest supplier of VCSELs by volume. One of its closest rivals is Agilent, which keeps all of its VCSEL production for internal use.
Honeywell has now decided that its VCSEL business is surplus to requirements. "This business has been considered non-core to Honeywell ACS s strategic focus of developing its sensing and control, fire and security, process solutions and building solutions businesses," said Roger Fradin, president of the Automation and Control Solutions (ACS) division of Honeywell.
Finisar has been one of Honeywell’s largest customers. The VCSEL Optical Products business generated approximately $36 million in revenues during 2003, including approximately $9 million from components supplied to Finisar.
Finisar will now have to decide how to deal with the technologies it acquired from start-up Genoa, as well as building a firewall between the Honeywell group and the rest of Finisar. This is because many of Honeywell’s customers are transceiver manufacturers that compete with Finisar.
Finisar expects the former Honeywell business to contribute approximately $25-$30 million in revenues during the first year of operation with a positive impact on gross margins and pretax earnings, excluding the impact of non-cash charges related to the acquisition.
"We plan to continue the operation of this business as a worldwide supplier of VCSELs," said Jerry Rawls, Finisar s President and CEO. "This group has developed a reputation as an excellent supplier to the industry and we expect to continue that tradition.
“In addition, VCSELs are probably the single most important component in a short wavelength transceiver in terms of performance, reliability and cost. With short wavelength transceivers comprising a significant portion of our total unit volume, this acquisition will also help us to realize additional cost savings.”
Honeywell VCSEL Optical Products and Finisar have had a long-standing relationship dating back to 1996 when Honeywell introduced the first VCSEL component specifically targeted for fiber-optic data communications. Finisar was one of the first customers to adopt this new technology for LAN and SAN applications.
