Sunday, October 16, 2005

ADVA Acquires Covaro for Ethernet Demarcation Devices

ADVA Optical Networking agreed to acquire Covaro Networks, a start-up offering Ethernet demarcation products, for approximately $24 million in stock and cash.

Covaro, which is based in Richardson, Texas, developed a line of products that enable service providers to offer intelligent Ethernet services over fiber, copper, SONET/SDH, DS3/DS1 and E3/E1. Covaro's "Etherjack" technology allows carriers (or enterprises) to transport and manage Ethernet services using traditional management methods for T1/T3 services. The system provides an Ethernet demarcation point, which allows in-service performance monitoring, and out-of service fault isolation and diagnosis for Ethernet services. The product line includes:

  • CC-16000 -- aggregation platform works with Covaro's Ethernet extension customer premise devices to extend the reach of Ethernet over copper, fiber, SONET/SDH or TDM (DS3/E3, DS1/E1). The CC-16000 is deployed at the first aggregation point in a carrier or enterprise network such as: central offices, co-location spaces, outdoor cabinets, MTUs or enterprise headquarters.

  • CC-624 -- a customer premise demarcation device extends the reach of Ethernet services over existing SONET/SDH OC-3 or STM-1 infrastructure and is ideally suited to provide a wide range of Ethernet services both in-region and out-of-region. Smaller and less expensive than MSPP or micro-MSPP equipment, the CC-624 can aggregate and transport Ethernet services over SONET/SDH networks without the expense of both MSPP and Ethernet switching equipment.

  • CC-411 -- an Ethernet extension device utilizes fiber to transport optical Ethernet (100FX/LX/SX/ZX/BX) up to 80 km or further depending on the SFP device utilized.

  • CC-410 -- an Etherjack demarcation device for existing Ethernet transport systems or services. It provides both a network interface device (NID) and a user network interface (UNI) aligned with 802.3ah (EFM) and MEF standards.

  • CC-301 - provides the ability to map Ethernet over DS3s and serves as the demarcation point at the customer site. It is designed to take advantage of available DS3 transport systems or leased DS3 facilities to deliver Ethernet services either on or off net. The platform leverages Covaro's "Etherjack" technology, which provides remote monitoring and diagnostics for Ethernet services. In addition, Covaro said multiple CC-301s could be used in a back-to-back configuration or combined with its Covaro's CC-16000 aggregation platform.

  • CC-101 -- uses available copper facilities and bonding technology to deliver intelligent Ethernet services up to 18,000ft.

ADVA said Covaro will provide a strong complement to its Fiber Service Platform (FSP), expanding the features and functionalities of ADVA's Ethernet access solution.

Under the deal, a price component of US$15 million will be paid in 2,024,190 to-be-issued shares of ADVA common stock via a capital increase. Thirty-five percent of these shares will be tradable immediately upon issuance, and the remaining new shares will be subject to various lock-up provisions. A second price component of approximately US$4 million will be paid in cash. Furthermore, an earn-out of up to US$5 million may be paid in cash based on achievement of specific sales and gross margin targets in Q4 2005 and FY 2006 for products developed by Covaro.
  • In February 2004, Covaro Networks raised $25.3 million in Series B funding for its Ethernet services management system. The new funding round was lead by Centennial Ventures -- a new Covaro investor with offices in Denver, Colo., and Austin and Houston, Texas. Participation also came from existing investors CenterPoint Ventures, InterWest Partners and Sevin Rosen Funds. This comes in addition to first-round funding that netted the company $16.7 million.

  • Covaro is headed by Joe Bass. Prior to joining Covaro, Bass was VP and general manager of the wavelength routing business unit at Cisco Systems Inc. He joined Cisco in 1999 with the acquisition of Monterey Networks, where he served as president and CEO.

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