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Lucent Buys WAN Equipment Vendor

Lucent Technologies (www.lucent.com) today said it plans to acquire Nexabit Networks (www.nexabit.com), a privately held start-up developer of high-performance Internet Protocol (IP) wide area network (WAN) switching and routing equipment, for about 14 million shares of Lucent common stock.

Nexabit designs highly reliable, ultra-high-speed "super switches" that operate at terabit rates -- that is, at one trillion bits or more per second -- for the next generation of Internet and carrier-class packet networks.

According to a report by Chris Nicoll, principal analyst of carrier infrastructure at Current Analysis Inc. (www.currentanalysis.com), Cisco is a clear leader in this space. The report, entitled Lucent Goes Terabit with Nexabit, states that Current Analysis doubted the ability of any of the terabit startups, such as Nexabit, to make a serious dent in this market on their own. For Lucent, the acquisition satisfies a key IP product need that was not filled by the Ascend Communications acquisition completed last week, and it also lends additional strength to Lucent's next-generation network strategy, according to the report.

Lucent and Nexabit already have an agreement to integrate Lucent's leading Dense Wavelength Division Multiplexing (DWDM) optical components into Nexabit products. The joint work will enable Nexabit products to provide integrated switch routing of IP traffic directly onto a DWDM optical core network at an industry leading OC192 standard rate of 10 gigabits per second per wavelength.

Lucent expects the transaction to be completed by July 31, 1999. The merger, which will be accounted for as a pooling of interests, is expected to be neutral to earnings in fiscal 1999 and fiscal 2000. -- Thomas Sullivan

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.

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