Nortel Networks has announced a definitive agreement to acquire Sonoma Systems, a maker of customer-premises access products employed by major carriers in their managed services.
The all-stock $US540 million acquisition will enable Nortel to offer service providers an integrated- access service delivery platform for enterprises that is tightly tied to Nortel's optical gear in the core of carrier networks.
Products such as Sonoma's usually provide slower T-1 "first mile" access to service-provider nets, Nortel and Sonoma officials say.
The carrier managed-services market is projected to reach $18 billion by 2002, Nortel said on Tuesday, citing data from The Yankee Group in Boston. The market is $10 billion this year, the company says. "The opportunity is explosive, and it's here and now," says Steve Schilling, president of Nortel's access networks group.
Sonoma had revenue of $7 million last year. The company was founded in 1998 and employs 128 people. The price Nortel is paying for Sonoma is in line with the value Sonoma would have enjoyed had it gone public, says company CEO Greg Koss.
Sonoma's products integrate Internet access, corporate data traffic, and voice and video services onto an ATM trunk to the public network. ATM link speeds include NxT-1 inverse multiplexing, DS-1, E-1, DS-3, E-3 and OC-3c.
The products compete with Ascend and Sahara products acquired by Lucent, and with managed-services products from Cisco.