Nortel to buy Qtera for $US3.25b

Nortel Networks has paid $US3.25 billion in Nortel stock to buy Qtera, a privately-held maker of long-reach optical networking systems.

A portion of the stock price is contingent upon the Florida-based Qtera reaching certain business objectives, Nortel said in a statement issued today, although the company did not outline the criteria in the statement.

The purchase is designed to give Nortel cutting-edge optical technology that produces improved Internet performance and economics, Nortel said. Qtera's technology enables optical signals to be sent up to 4000 kilometers in optical form at speeds up to 10G bits per second, Nortel said. By transmitting data as light, Qtera's technology eliminates up to 75 per cent of the optical-electrical-optical conversions, according to the statement.

After the acquisition is completed - expected to be in the first quarter of 2000 - Qtera will become a subsidiary of Nortel and Qtera's president and chief executive officer Fahri Diner will lead the business.

The deal is subject to approval of Qtera shareholders and is not expected to affect Nortel's earnings until 2001, at which time it will raise Nortel's profit after acquisition costs. The number of Nortel shares to be given to Qtera shareholders will be based on the average price of Nortel stock during a specified period prior to closing, but will not exceed 48 million and not be less than 30 million shares, according to the statement.

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