Disruptive Technology to Bring Six-Fold Increase in Distance
Light Travels in Optical Networks, and Deliver Improved
Internet Performance And Economics
Brampton, Ont.- Nortel Networks* [NYSE/TSE: NT] announced
today a definitive agreement to acquire Qtera Corporation, a
privately-held company that produces ultra-long-reach
optical networking systems, for up to US$3.25 billion in
Nortel Networks common shares, a portion of which is
contingent upon Qtera achieving certain business objectives.
The acquisition of this leading edge start-up gives Nortel
Networks first mover advantage through breakthrough optical
technology that delivers improved Internet performance and
Qtera has developed technology that enables optical signals
to be sent as far as 4000 kilometres or 2500 miles in purely
optical form, providing advantages in cost, reliability, and
scalability to long-range networks. Qtera's solutions
operate at 10 Gigabits per second (Gbps), the line rate used
by leading-edge high-performance Internet backbone networks.
"The surge in Internet usage and eBusiness makes the
delivery of the high-performance, all-optical Internet
essential," said John Roth, president and chief executive
officer, Nortel Networks. "The addition of Qtera's
capabilities enhances Nortel Networks ability to deliver to
customers the greatest capacity, the highest speed and, now,
the longest reach Optical Internet solutions in the market."
"The combination of Nortel Networks' global reach and market
leadership in the Optical Internet and our expertise in
ultra-long-reach optical networking creates a truly
formidable leader in the all-optical Internet space," said
Fahri Diner, president and chief executive officer, Qtera.
"Our common commitment to a high-performance Internet will
create tremendous value for our customers, partners and
On today's Internet, distance is not a restriction. Internet
users trigger information flow with a simple click of a
mouse between computers thousands of miles apart.
Transmitting this flow of information as light, Qtera's
technology makes this process much more efficient and
cost-effective, eliminating up to 75 percent of
optical-electrical-optical conversions. Data sent in the
form of light through optical networks fade over distance,
requiring periodic conversions to electrical form to boost
the signal before re-conversion to light. Frequent
optical-electrical-optical conversions introduce significant
additional costs to today's networks, in terms of capital,
space, reliability, and performance.
Combined with Nortel Networks leading Optical Internet
solutions, Qtera's technology positions Nortel Networks to
offer the industry's most powerful optical solutions in
reach, bandwidth, speed, and manageability, while continuing
to reduce costs for our customers. The Qtera technology
brings Nortel Networks solutions closer than ever to the
Qtera's solutions were successfully trialed by Qwest
Communications, which is also a customer of Nortel Networks.
Qtera has its headquarters and about 140 employees in Boca
Raton, Florida, and about 30 employees in Richardson, Texas.
Upon completion of the acquisition, Qtera will become a
wholly-owned subsidiary of Nortel Networks, with its
operations remaining in those locations. Qtera president and
chief executive officer Fahri Diner will continue to lead
this business as president, reporting to Mike Unger,
president, Optical Networks, Nortel Networks.
The transaction, which is expected to close in the first
quarter of 2000, is subject to customary regulatory
approvals and the approval of the Qtera shareholders, and is
expected to be neutral to Nortel Networks earnings per share
in calendar year 2000 and accretive in calendar year 2001
(excluding acquisition-related charges).
The number of common shares of Nortel Networks to be issued
shall be determined based on the average price of Nortel
Networks common shares during a specified period prior to
closing and shall not be greater than 48 million or less
than 30 million. For example, based on a US$88 price per
Nortel Networks common share, the transaction would result
in Nortel Networks issuing approximately 37 million common
shares for all the shares of Qtera on a fully diluted basis.
Nortel Networks is the world leader in the Optical Internet.
More than 75 percent of North American Internet backbone
traffic travels across Nortel Networks systems. In 1999,
Nortel Networks set the standards for speed with its 80 Gbps
line rate OPTera technology, and in bandwidth with the
OPTera 1600G, which transmits 160 colours of light across a
10 Gbps systems, for total capacity of 1.6 terabits per
Nortel Networks is a global leader in telephony, data,
wireless and wireline solutions for the Internet. The
Company had 1998 revenues of US$17.6 billion and serves
carrier, service provider and enterprise customers globally.
Today, Nortel Networks is creating a high-performance
Internet that is more reliable and faster than ever before.
It is redefining the economics and quality of networking and
the Internet through Unified Networks* that promise a new
era of collaboration, communications and commerce. Visit us
Qtera Corporation, headquartered in Boca Raton, Fla., is a
privately held company dedicated to the development of
photonic networking solutions for telecommunications service
providers. Qtera's solutions provide a greatly simplified,
purely photonic backbone for the Optical Internet - free of
bandwidth restrictions and spatial boundaries. Qtera's
scalable architecture enables unparalleled performance,
rapid wavelength provisioning and restoration, and most
importantly, lowest cost survivable bandwidth. Founded in
1998, Qtera is backed by such leading venture firms as
Battery Ventures, Mayfield Fund and Oak Investment Partners.
In addition to its headquarters in the heart of Photon
Beach, South Florida's growing community of high-tech
companies, Qtera has offices in the Telecom Corridor of
Richardson, Texas. At present, the company has more than 170
employees. For more information on how Qtera is building the
Backbone of the Optical Internet, please visit the company's
website at www.qtera.com.
Certain information included in this press release is
forward-looking and is subject to important risks and
uncertainties. The results or events predicted in these
statements may differ materially from actual results or
events. Factors which could cause results or events to
differ from current expectations include, among other
things: the impact of price and product competition; the
dependence on new product development; the impact of rapid
technological and market change; the ability of Nortel
Networks to integrate the operations and technologies of
acquired businesses in an effective manner; general industry
and market conditions and growth rates; international growth
and global economic conditions, particularly in emerging
markets and including interest rate and currency exchange
rate fluctuations; unanticipated impact of Year 2000 issues;
and the impact of consolidations in the telecommunications
industry. For additional information with respect to certain
of these and other factors, see the reports fi led by Nortel
Networks with the United States Securities and Exchange
Commission. Nortel Networks disclaims any intention or
obligation to update or revise any forward-looking
statements, whether as a result of new information, future
events or otherwise.
Qtera, "Backbone of the Optical Internet" and Photon Beach
are trademarks of Qtera Corp.
* Nortel Networks, the Nortel Networks logo, the Globemark,
Unified Networks, and How the world shares ideas are
trademarks of Nortel Networks.
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Or visit Nortel Networks' website at www.nortelnetworks.com
and Qtera's website at www.Qtera.com.
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