Nortel Networks has made its first acquisition in several years with the purchase of Novera Optics, a California company, for up to $26 million in cash.

It made the deal through LG-Nortel, a Korean communication joint venture, that has generated healthy results for Nortel in Asia for several quarters.

By buying Novera, LG-Nortel gets a piece of a new approach to delivering broadband access that has already attracted Ericsson and other competitors.

It also takes Nortel back into the access business, a business that former chief executive John Roth decided to abandon in 2000 because Nortel trailed Alcatel and other bigger players.

Realizing the mistake as access became a critical business delivering voice, television, videos and other advanced services, Nortel tried and failed to put together a joint venture with Huawei, the rapidly rising Chinese equipment maker.   

The cash-strapped company has been unable to make acquisitions for several years while competitors have snapped up many promising start-ups.

Novera technology combines optical-wave division equipment with passive optical gear to deliver large amounts of broadband to consumers and business customers. Korea Telecom is the biggest announced customer of Novera, which was founded in 1999 in Santa Clara, Calif., and has a South Korean subsidiary.

LG-Nortel will pay $16 million in cash for Novera plus an additional $10 million over the next 18 months based on sales performance.

LG-Nortel chief executive officer Jae Ryung Lee said "Novera's technology will be indispensable for our carrier customers because it will simplify delivery of carrier-class ethernet fibre-to-the-premises services to their own customers."

Philippe Morin, president of Nortel metro ethernet networking solutions, said, "Novera Optics' technology will help carriers deliver new services that carry voice, video, and broadband data from the network core to the end user at high speeds."

John Barton, chief executive officer of Novera, said "Our technology is a natural complement to Nortel's and LG-Nortel's carrier ethernet solutions."

Source:canada.com