C-COR.net Snares Philips Unit

Author:
Updated:
Original:

Hoping to broaden its reach into the broadband equipment market, C-COR.net Corp. will snap up Royal Philips Electronics N.V.'s broadband-networks division for approximately 80 million euros (roughly $78 million) and the assumption of certain liabilities.

C-COR.net chairman and CEO David Woodle said Philips Broadband Networks would bring his company a full line of transmission products focused on the international marketplace.

PBN's product line includes valuable segmentable optical nodes "that will add nicely to our product family," Woodle noted. "Their wave-division multiplexing solutions are not only very strong, but complementary to our high-density platform.

"By adding together the technologies, it will allow us to really provide complete systems solution to our customers much sooner than we could have on a stand-alone basis."

The acquisition, expected to close by year-end, will triple C-COR.net's international business.

The integration process will cost C-COR.net about 2 to 3 cents in earnings per share for the next two quarters, according to Woodle. Upon completion, though, the acquisition will add more than $100 million in new business each year.

Some restructuring is likely as duplicate positions are eliminated, Woodle said.

C-COR.net makes this acquisition as it braces for a financial hit, due to revenue losses tied to Adelphia Communications Corp.'s Chapter 11 bankruptcy proceedings. Not only will C-COR.net lose 10 percent to 15 percent of its business this year because of canceled Adelphia contracts, but the MSO also owes C-COR.net some $41 million for gear it has purchased.

C-COR.net will have to take a charge for the outstanding accounts receivable, which could total as much as the full $41 million, said Woodle. But there's a silver lining.

"Most people believe based on the current assets a portion of that we will collect, and at a minimum we will get a tax refund of up to $10 million based on writing off that debt," he noted.

Related