Optical Communication Products, Inc. to Acquire GigaComm; Combination Expected to Bolster Revenues Approximately 25%
14 Julho 2006 - 1:03AM
Business Wire
Optical Communication Products, Inc. (NASDAQ NMS: OCPI) -- Propels
OCP to become market leader in Japan, adding Japanese revenues,
significant manufacturing capacity, and product development
capabilities for the world's most advanced telecommunications
market. -- Increases the Company's projected revenues by about 25%,
giving it the scale and geographic diversity it needs to be a
stronger global competitor. -- Thrusts the Company into a leading
position in the fiber-to-the-home market, by far the fastest
growing sector in the optical fiber industry. Optical Communication
Products, Inc. (NASDAQ NMS: OCPI), a leading manufacturer of
optical subsystems and modules, today announced it has agreed to
acquire privately-held GigaComm Corporation, a Taiwan-based
supplier of passive optical network (PON) fiber-to-the-home (FTTH)
components, in an all cash transaction. OCP will pay approximately
$20 million for GigaComm. Based in Taiwan, GigaComm is currently
the leading supplier of FTTH modules in Japan, which is presently
the world's largest FTTH market. GigaComm provides PON components
to many of Japan's leading technology companies, including
Mitsubishi Electric Company. The transaction is OCP's initial
venture in Asia and is projected to be completed by the end of this
summer. Acquiring GigaComm is part of OCP's strategy to make its
product offerings more comprehensive, bring focus to its efforts in
Asia, and to extend the Company globally. The strategic combination
is expected to increase OCP's level of current revenues by
approximately 25%. The Japanese FTTH market is the largest in the
world, with the number of FTTH subscribers nearly doubling from 2.9
million at the end of March 2005 to 5.4 million by March 2006.
GigaComm holds the majority of the country's market share for
Gigabit Ethernet Passive Optical Network (GEPON) modules. The GEPON
standard is widely deployed in Japan to enable data, video and IP
voice services over fiber optic networks. NTT, Japan's largest
service provider, has reported that it expects to have 30 million
FTTH subscribers by 2010. A recent report from market researcher
Heavy Reading indicates that the number of households connected via
FTTH worldwide will soar to nearly 86 million in 2011, up from
about 11 million in 2006, a nearly 700% increase. FTTH growth over
the next five years will be dominated by Asia, where the number of
connected households will grow to 59 million by 2011. The rest of
the subscriber base at 2011 is expected to be split equally between
the Americas (mainly the U.S.) and the EMEA (Europe/Middle
East/Africa) region. "As the largest supplier of FTTH modules in
Japan, GigaComm gives us instant penetration into the Asian market,
as well as positioning OCP to take advantage of the emerging
Gigabit Passive Optical Network (GPON) markets in North America and
Europe," said Dr. Muoi V. Tran, OCP's Chairman and CEO. "The
acquisition of GigaComm also gives us an enhanced ability to
increase capacity through its integrated manufacturing facility, an
important second and competitive source of lasers, and a talented
pool of engineers and management in Asia." GPON is the technical
standard for FTTH services expected to be deployed in the U.S. and
employs technology similar to the GEPON standard being implemented
in Japan. "GigaComm has been an outstanding PON supplier," said Jun
Uenobo, General Manager of Mitsubishi Electric Company's Purchasing
Department. "Over the past year, GigaComm has shipped us over one
million GEPON Optical Network Unit (ONU) modules without a single
defect to support the Japanese GEPON initiative. We look forward to
our growing partnership with GigaComm and the OCP team." GigaComm
will become a wholly owned subsidiary of OCP and continue to
operate in Taiwan. Dr. Jacob Tarn, GigaComm's President and CEO,
will remain with GigaComm and continue to lead the Company's
operations. "In addition to strengthening our design capabilities,
the acquisition brings to OCP's management team several proven and
respected industry leaders," Dr. Tran added. "We are excited about
this opportunity to achieve greater size and scale and believe this
strategic combination will provide value to our shareholders as
well as benefits to our customers." Dr. Tarn, GigaComm's President
and CEO said, "We are enthusiastic about this combination and
believe it will allow us to leverage our combined resources to
better anticipate the needs of the global customer base in the
highly competitive fiber optic and FTTH markets." Conference Call
Information: OCP will hold a conference call to discuss the
transaction on Friday, July 14, 2006 at 1:30 pm Eastern Time (10:30
am Pacific Time). The dial-in number for U.S. participants is
866-814-8399. International participants may call 703-639-1366. The
access code is 938322. The conference call will also be broadcast
live over the Internet at www.ocp-inc.com. To access the webcast,
go to the Investor Information section of the web site. A replay of
the call will be available approximately two hours after the call
by dialing 888-266-2081 (or 703-925-2533 for international callers)
and entering the access code 938322. The webcast will be archived
at www.ocp-inc.com. About Optical Communication Products: OCP
designs, manufactures and sells a comprehensive line of high
performance, highly reliable fiber optic subsystems and modules for
metropolitan area, local area and storage area networks. OCP's
subsystems and modules include optical transmitters, receivers,
transceivers and transponders that convert electronic signals into
optical signals and back to electronic signals, enabling high-speed
communication of voice and data traffic over public and private
fiber optic networks. Its strategy calls for more comprehensive
product offerings, a balance between growth and industry-leading
financial strength, and concerted penetration of global markets.
For more information visit OCP's web site at www.ocp-inc.com or the
www.globalprovince.com link to Investor Digest. OCP was founded in
1991 and has its headquarters in Woodland Hills, California.
Furukawa Electric Co. Ltd., based in Tokyo, beneficially owns 58%
of OCP's outstanding capital stock as of June 30, 2006. OCP
currently has approximately 370 employees. About GigaComm: GigaComm
was founded in 2000, has its headquarters and manufacturing
facilities in the Hsinchu Science-Based Industrial Park in Taiwan,
ROC, and has approximately 300 employees. GigaComm has been
privately financed since its inception by a syndicate of
institutional and private investors in Taiwan. Safe Harbor
Statement under the Private Securities Litigation Reform Act of
1995: This release contains forward-looking statements that involve
risks and uncertainties. Actual results may differ materially from
the results predicted. Important factors which could cause actual
results to differ materially from those expressed or implied in the
forward-looking statements include those detailed under "Risk
Factors" and elsewhere in filings with the Securities and Exchange
Commission made from time to time by OCP, including its periodic
filings on Forms 10-K, 10-Q and 8-K. Other factors that could cause
our actual results to differ materially from those expressed or
implied in the forward-looking statements include (A) factors
relating to the Company and the fiber optic communications
industry, such as (i) the risk that our customers are unable to
reduce their inventory levels in the near-term and (ii) the risk
that we are unable to diversify and increase our customer base; (B)
factors relating to the acquisition of GigaComm, such as (i) our
ability to obtain required approvals by regulatory agencies, (ii)
the possibility that the anticipated benefits from the acquisition
cannot be fully realized, (iii) our ability to successfully
integrate the operations of GigaComm with those of OCP, and the
possibility that costs or difficulties related to the integration
will be greater than expected, (iv) our ability to implement future
business and acquisition strategies, and (v) our ability to retain
personnel of GigaComm; and (C) factors relating to doing business
in Taiwan, such as (i) risks relating to political and diplomatic
issues between Taiwan and The People's Republic of China, (ii) risk
of natural disasters in Taiwan, such as earthquakes and typhoons,
(iii) economic and regulatory developments, (iv) potential
difficulty in enforcing agreements and recovering damages for their
breach, (v) exposure to greater risk of misappropriation of
intellectual property, (vi) disruption of air transportation from
Asia, (vii) changes in tax laws, tariffs and freight rates, (viii)
difficulty of managing global operations, including staffing and
managing foreign operations, (ix) differing labor regulations, and
(x) foreign currency risk. OCP undertakes no obligation to release
publicly any revisions to any forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
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