ATI Cashes Out of Broadcom; Powerwave Ups Nortel Pact
“We should be able to generate a lot more revenue than these strawberries,” says Kevin McCarthy, plant manager for Corning Inc.’s Orange County optical networking device unit.
Late last month, McCarthy, Corning executives and city officials gathered in a Fountain Valley strawberry field to stick some shovels in the ground for the ceremonial start of construction on the Corning, N.Y.-based company’s new OC plant.
When the plant is done around Labor Day, Corning plans to consolidate its 200 workers now in Garden Grove and Cypress at the new Fountain Valley facility, McCarthy said. In two years’ time, the new site could grow to as many as 800 people and several buildings, he said.
“We are doubling sales just about every year,” McCarthy said.
With the plant, Corning stands to be the largest optical networking gear maker in OC, which is dominated by chip and computer gear makers. The Fountain Valley plant is set to produce optical switches to be used by the likes of Williams Communications Group Inc., Level 3 Communications Inc. and other telecommunications companies.
Corning is part of a small optical sector in OC. Irvine-based Newport Corp. makes equipment for producing optical components. And Melles Griot, a unit of South Africa’s Barlow Ltd., has a photonics arm in Irvine and a laser group in Carlsbad.
McCarthy said he’s had no trouble finding skilled workers in the wake of some high-profile layoffs in OC, including those at Boeing Co. and Seagate Technology Inc.’s Anaheim plant.
“With the skills the people in Orange County have, it’s been easy to train into optics,” McCarthy said. “Some companies have had big layoffs in Orange County. We’re on the positive side of that. The downsizing of Boeing and Seagate has been a great boon for us.”
The switches from Fountain Valley are set to compete with similar offerings from JDS Uniphase Corp. as well as big European rivals such as Pirelli SPA and Alcatel Alsthom SA. In many cases, the products produced in OC will be going up against those from companies that also are Corning customers.
“We’ve been in competition with them for one reason or another,” McCarthy said of the optical networking gear makers. “But in some cases they also are our biggest customers.”
The plant is being built on land leased from the Sakioka family near the headquarters of memory products maker Kingston Technology Co.
The state’s ongoing power crunch didn’t deter Corning from expanding here, McCarthy said. In the case of a rolling blackout, he said, workers would take “an extended break.”
Unlike chip makers, Corning isn’t at risk of losing work in process during a blackout, just time, he said.
Corning, once known for cookware, was one of the hottest companies on Wall Street last year before its shares corrected along with other fiber optic stocks. On Jan. 24, the company beat profit estimates for the fourth quarter with earnings of $314.6 million, more than double the year-ago figure. Sales were up 52%, to $2.1 billion.
Even so, investors have sold off shares lately on fears of slower spending by big telecommunications companies. Several customers have indicated their orders may be smaller than expected in the first half of the year, the company said.
Out of Broadcom
Canadian graphics chip maker ATI Technologies Inc. has sold about 500,000 shares of Irvine-based Broadcom Corp. stock worth about $65 million and netting ATI about $54 million. The Broadcom stake came by way of ATI’s earlier investment in SiByte Inc. of Santa Clara. In December, Broadcom completed its buy of SiByte, in which ATI held an 11% stake. As part of the acquisition, ATI may receive more shares if SiByte achieves performance targets. ATI plans to use the proceeds of the stock sale to fund operations.
Power Pact
Irvine-based wireless amplifier maker Powerwave Technologies Inc. is expanding its business with Nortel Networks Corp. Powerwave said it is amending its existing supply deal with Nortel to cover third-generation, multi-carrier power amplifiers designed for networks based on the universal mobile telecommunications system, a European wireless standard that allows for global roaming and personalized features.
It is estimated that Nortel’s purchase commitment will generate about $140 million in revenue for Powerwave this year. Last month, Powerwave reported fourth-quarter sales of $121.2 million, up 33% from a year ago, and earnings of $12.4 million, up 47%.
Shanghai Surprise
Entridia Corp., an Irvine designer of optical networking chips, said China’s Shanghai Bell Co. plans to use the company’s optical routing semiconductors in its network. Entridia’s packet-forwarding engine chip speeds data routing by redefining the way data is labeled. Three-year-old Entridia counts Conexant Systems Inc., Newport Beach, and San Diego’s Applied Micro Circuits Corp. as investors.
