Optical Broadband Component Houses Merge.

In the latest in a string of moves melding smaller optical broadband players into what's emerging as a single larger company, publicly traded photonic communications component house Lumera Corporation has agreed to merge with privately held GigOptix LLC, which makes physical media dependent (PMD) ICs for optically connected communication systems.

Under terms of the deal, GigOptix will be the surviving company name. Lumera will issue approximately 20 million shares and options to members and employees of GigOptix, resulting in an approximately 40 million shares outstanding for the combined company. GigOptix CEO and Chairman Avi Katz retains his position as head of the combined company. DBSI Inc. which is GigOptix's majority shareholder through its subsidiaries Stellar Technologies LLC and iTerra Communications LLC, will become the new company's largest shareholder.

Lumera had been searching for a new CEO for the past eight months, a search that now ends with the deal.

No value was placed on the deal; however, if it's looked at as an acquisition - which some in the industry are doing despite it being called a "merger of equals" - Lumera has a market cap of nearly $38 million. GigOptix, though, has been generating far more sales. In the first quarter, the company estimated it would do about $2 million, increasing to $2.2 million in the second quarter of this year. On a combined basis, the two companies expect $6 million in sales for the first half of 2008. Lumera, which has been running deep in the red, currently is recording less than $1 million per quarter in sales and, for its last four quarters, it recorded only $2.77 million. This reflects the fact that Lumera's revenues -- it makes high-speed modulators based on electro-optic polymers -- primarily come from government-funded research projects, described by the company as "leading potentially to large commercial product opportunities." In contrast, GigOptix generates product revenues selling its 10Gb/s and 40Gb/s drivers and receivers to a global base of blue-chip ...