"We are very excited about this acquisition and believe that, together (the
combined company), will revolutionize the mobile Internet," said Tellabs
Marketing Communications Manager Ariana Nikitas.  She further stated the
acquisition would extend Tellabs mobile backhaul product portfolio (see CHART
below) to a fast growing adjacent market.  "The resulting products will
enable service providers to deliver richer experiences to mobile end users," she
said.

Tellabs has a large portfolio of transport and network management products for
wireless backhaul.  These include the following:

Analysis:

Tellabs recognizes the mobile Internet is taking off and WiChorus has a product
their service provider customers need to take advantage of this opportunity. 
Sales of smartphones are growing more than 30% a year while netbook sales have
been very strong.  People are spending more time surfing the Internet while
on the move.  As a result, Tellabs’ mobile customers expect mobile data
traffic to grow 30% to 50% a year for the foreseeable future.  AT&T
recently indicated its mobile traffic has quadrupled over the past year.

Such high growth demands scalable, next-generation network architectures to
deliver 3G and 4G multi-media and video services.  This acquisition will
enable the combined company to help facilitate delivery of those services, while
providing richer experiences to mobile Internet users.  It will enable
Tellabs to compete with Ericsson, Alcatel-Lucent, and Cisco (which recently
announced its acquisition of Starent Networks) in the 4G/3G mobile packet core
market.

Since Tellabs (and many other companies) haven’t been spending much money on
R&D, they were forced to make this acquisition to remain competitive in the
mobile backhaul market.  Independent of that, Tellabs has a very high
opinion of WiChorus’ mobility management and routing technology.

On a conference call Thursday, Tellabs CEO Robert W.  Pullen said the
Wichorus platform was a "purpose- built 4G (WiMAX, LTE) architecture that is
backward compatible with 3G (GGSN, HSPA, HSPA+)." As a result, it can be sold to
WiMAX operators now and 3G or LTE operators in the future.  Tellabs stated
there were two potential service provider customer types for the WiChorus
platform:

- Those that are optimizing their 3G mobile networks and evolving to 4G (LTE).
- Those that have leapfrogged 3G to deploy 4G (Mobile WiMAX and LTE).

Wichorus’ "best in class" deep packet inspection capability and performance was
particularly attractive to Tellabs.  It was said to produce much less
throughput degradation than competitor mobile packet core products. 
Tellabs claims that the WiChorus 4G packet core product offers eight times more
throughput than competitive offerings. 

The Wichorus SmartCore? platform was said to address the unique requirements of
the mobile Internet:

- Includes a full range of mobile IP products (from low entry price to highly
scalable) for applications including GGSN, LTE and WiMax, plus new application
enablement with superior DPI capability. 

- Offers 8 times more throughput, 4 times more simultaneous Internet connections
and active users, compared with competitive platforms in gateway applications.

- Uniquely combines world-class application analytics with a mobile core gateway
for improved traffic engineering and network optimization. 

- Enables customers to analyze and monetize more than 400 of the top mobile
Internet applications. 

- Makes mobile networks content-aware and context-aware, with personalized
application-awareness. 

- Outperforms other platforms in delivering mobile Internet capacity.  For
example, competitors’ capacity significantly degrades (as much as 30% to 50%)
during deep-packet inspection (DPI)

- Delivers new and differentiated applications such as Internet offload and
distributed LTE gateway.  The SmartCore? platform can offload as much as
70% of traffic at the network edge, increasing core network efficiency and
improving user experiences.  As a result, customers can save as much as 50%
in capital expenses, compared with the present method of operation. 

The WiChorus ASN Gateway is being sold to Clearwire and trialed by other mobile
WiMAX network providers.  Tellabs CEO Pullen said that the company’s next
product will be for "business services delivery" using femtocells and picocells. 

When asked to comment on future product plans, Ms.  Nikitas declined,
stating that the acquisition had not yet taken place and could not comment till
the merger had actually been consummated.

Opinion:

We think this is a very good move for both companies and we predict more
acquisitions and consolidation in the network equipment market.

Reference:

http://www.tellabs.com/news/2009/index.cfm/nr/79.cfm