Alcatel buys Packet Engines for $315m

NEWS French telecoms manufacturer Alcatel is to buy Packet Engines in a cash deal estimated to be worth $315m including incentive schemes for employees. Alcatel hopes the Gigabit Ethernet company will help beef up its presence in the IP market. A spokesman for Alcatel said it believes Packet Engines has a lot to offer and by joining together, they "can open up a larger market". Matthew Nunney, European MD at rival firm Foundry Networks, called it "wonderful news". He explained that once companies have been acquired, they tend to disappear for a few months, which leaves the market more open to competitors. He regards the move as a good one for the company and investors, but said, "there are other ways of keeping investors happy". He added: "As a company, we are looking to float on Nasdaq within the next six months." Asked if the market will be affected, Nunney said it is being trimmed down with only two real players left - Foundry Networks and Extreme. "Other companies will follow suit, it's all part of the global consolidation of networking," he said. Clive Longbottom, strategy analyst at CSL Consulting, said it is not so much globalisation, but telecoms companies trying to get into networking. He explained that there are not many networking companies left, and a company like Alcatel, "couldn't afford someone like 3Com". "That's why acquisitions are for smaller niche vendors and single technology companies," he said. Viewing 10/100Mbps networking companies as 'legacy system' operators, Longbottom believes that companies are going for the one edge of the sword, "going for a niche player in tomorrow's technology".