Cisco Systems said Tuesday it agreed to buy privately held Clarity Wireless Corporation for US$157 million in stock, giving Cisco the technology to offer wireless last-mile connections into homes and businesses.
Clarity Wireless of Belmont, California, develops wireless communication gear for telecommunication companies to carry voice, data, and video traffic. The company's products can create wireless networks in obstructed areas, Cisco said. Currently, fixed-wireless networks require unobstructed, line-of-site connections between end points.
Cisco (CSCO) will use Clarity's technology to improve its equipment for high-bandwidth data services, like xDSL and cable modems. Cisco was a minority investor in Clarity Wireless, and the two companies spent the past year developing fixed-wireless products to integrate with Cisco's other xDSL and cable products.
Cisco will exchange shares of its stock worth around $157 million for the portion of Clarity it does not already own. Cisco expects a one-time charge against after-tax earnings of between 6 and 9 cents a share. The acquisition should be complete by November.
The deal will make Cisco, already the biggest computer-network gearmaker, a more prominent player among traditional telecommunications equipment providers. Wireless last-mile technologies are considered alternatives to the existing copper-wire, local phone networks. The so-called wireless local loop is being considered by local exchange carriers and long-distance companies as an alternative to the public telephone networks.
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Nortel thins its ranks: Northern Telecom, the Canadian telecom equipment maker, said it will lay off 3,500 employees as it restructures its business around Internet solutions, following its recent purchase of Bay Networks.
Confirming a report in the Ottawa Sun, Nortel (NT) spokesman Peter Janecek said Monday the company will cut jobs from all divisions. The firm didn't confirm which jobs would be eliminated or when the job cuts would occur.
Nortel, the sixth-largest telecommunications equipment maker, employs more than 80,000 people worldwide. The company decided earlier this year to focus its business on data-networking products that comprise the backbone of the Internet.
In August, Nortel completed its $7.68 billion acquisition of Bay Networks, a data-networking gearmaker, giving it a quick entry into the Internet infrastructure business. The pending job cuts reflect Nortel's further reorganization around Internet and data-networking solutions.
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Iridium on track: Iridium World Communications Tuesday said it is on track to become the world's first operational satellite-based wireless phone company.
"All satellites are loaded with the final operating software and we are in the final process of integrating the pieces," Edward Staiano, Iridium's chief executive, told a group investors at the NationsBanc Montgomery Securities investment conference. "We are still on target to meet our commercial activation date of November 1st."
Iridium (IRIDF) plans to provide wireless phone service to any point on earth through a constellation of 66 satellites. To use the service, customers will need an Iridium phone currently priced at about US$3,000. Phone calls will cost between $1-6 a minute.
Iridium will begin testing service on 23 September.
Staiano acknowledged that there are glitches that must be ironed out before November's planned launch. "It should be no surprise that a system with 20 million lines of code would have bugs that have to be fixed. Our challenge is to fix them and fix them rapidly."
Iridium originally planned to begin commercial service on 23 September. Last week, it delayed the launch for six weeks to continue debugging the system.
Reuters contributed to this report.
