The photo below shows Finisar 100G CFP modules for the Verizon end-to-end field trial with Verizon, NEC, Juniper and Finisar.

Provide your answer using the blog commenting tool (only one answer allowed per person). The fifth person to answer correctly wins a Finisar t-shirt (previous winners excluded). There will be a slight delay before your response is posted. Check back later this week for the winning name.

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The winner of our second trivia question is….Pauline Rigby. Pauline, we will send you a Finisar t-shirt!

It is very exciting to see so many optics trivia-savvy folks in our industry. Thanks to everyone for participating and stay tuned for trivia question #3 and your chance to win a Finisar t-shirt.

Provide your answer using the blog commenting tool (only one answer allowed per person). There will be a slight delay before your response is posted. Check back in a few days for the winning name of a Finisar t-shirt.

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The winner of our first trivia question is Andrew Schmitt. Andrew, we will send you a Finisar t-shirt!

Thanks to everyone for participating.

Question: What year was the first transatlantic telephone cable using optical fiber deployed?

Provide your answer using the blog commenting tool (only one answer allowed per person). There will be a slight delay before your response is posted. Check back later this week for the winning name of a Finisar t-shirt.

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In order to participate, you must subscribe to our blog, Lightspeed, or be a frequent visitor (which we hope you’re already doing), then just look out for the questions starting today and appearing over the next few weeks until the OFC Conference. Answers must be submitted via the comment field on the blog.

Contestants who provide correct responses before the next question is posted will be entered into a drawing and one lucky winner per question will receive a Finisar T-shirt! But, that’s not all…every trivia submission (right or wrong) will be entered into a grand prize drawing for a Pico-Projector featuring LCoS technology.

Weekly winners will be announced via the blog so be sure to check back regularly. The grand prize winner of the Pico-Projector will be posted to Lightspeed the last week of March.

For those of you attending OFC, you can also participate in the grand prize drawing by visiting us at our OFC booth #1613 the week of March 21st. Come on by for more details!

Follow us on Twitter @Finisar to receive information and updates about the contest.

Good luck!

We at Finisar feel extremely honored and humbled to receive this recognition.

Mark Colyar, Finisar’s SVP of Operations and Engineering, received the award which was presented by Philippe Keryer (ALU President, Carrier Business Unit), Michel Rahier (ALU COO and President, Operations), and Jean David Calvet (ALU Chief Procurement Officer).

So, for what it’s worth, here’s Old Poole’s Almanack for what may be in store in optical communications in the twenty-teens.

1 Gb/sec to the Home
For those of us with long-term memories, it has been nearly 20 years since the introduction of the Hayes Smartmodem- the original 300 baud modem that kick-started the era of computer–to–computer communications. Today, 100 Mb/sec is becoming commercially available on an increasing scale. As communication bandwidth to the home has typically doubled every couple of years, then home bandwidth connectivity in excess of 1 Gb/sec is a shoo-in for 10 years from now.

Coherent to the Rescue
The rising demand for bandwidth in the home will, in turn, drive the need for more capacity in the backbone. As mentioned in a previous column, coherent transmission is coming soon to a system near you. Whilst significant (as opposed to bleeding edge) 100G coherent deployments are probably still a couple of years away, by the end of the decade, it looks very likely that coherent transmission in one of its various forms and flavors, will play a significant role in high speed communications.

The End of the ITU Grid?
Whilst I’m pretty comfortable about the first two predictions, a slightly more speculative prediction is that over the next 10 years we may see the beginning of the end of the rigid adherence to the ITU DWDM grid. The ITU grid was introduced in the mid 1990s when a high-speed signal was 2.5 Gb/sec and 100 GHz channel spacing seemed pretty dense. We are now reaching the point where 100 Gb/sec on 50 GHz channel spacing looks more like the norm in long-haul networks. Moving forward, however, it is clear that we will need to use the available spectrum within a fiber in an efficient as possible manner. This in turn will require the network to transmit low bit-rate signals in narrow channels and high-rate signals in broader channels. Whilst this approach is common in radio engineering where the issues of channel congestion have been around for many years, we are likely to adopt many of the techniques used there to maximize the capacity of a fiber network (and coherent modulation is just the first of these). Whilst this will require significant advances in Network Operating Systems to manage the complexity inherent in such an arrangement, many of the components required (i.e. transceivers with programmable data rates, Wavelength Selective Switches with variable bandwidth, etc.) are indeed already either developed or under investigation.

Next Stop: 400 Gb/sec/wavelength
Whilst we are still a couple of years away from 100G deployments, the debate has already begun over the next jump in transmission data rates – do we go for 400 Gb/sec or jump straight to 1 Tb/sec? Since the driver of telecom bit-rate is now the need to match the pipe-size on the big-iron core routers, we need to look at what the datacom guys are thinking. Here, it looks like the next step will be 400G, based on an extension of the 4×25 Gbaud multi-wavelength technology that is currently being developed for the CFP MSA. So, will we see 400 Gb/sec/wavelength telecom systems by 2020? Here, I’ll stick my neck out and say yes – we probably will as there are also strong technical reasons for increasing the per-wavelength capacity. However, the technical challenges to be overcome before we can get to this point are massive and will almost certainly limit any deployment to very high capacity backbone links, such as found along the US east coast and between the major cities in Europe.

Green is Good
Finishing up with another no-brainer – despite the atrocious failure of political will in Copenhagen, the need to use the finite resources of the earth more efficiently will become an even greater driver of innovation going forward. Optical communications, as has been shown many times, is by far the ‘greenest’ form of high-speed communications and will continue to be favored as we work to reduce our energy consumption per unit of bandwidth consumed. This will, in turn, drive new network architectures and routing algorithms that favor energy efficiency (and hence more optics) over existing ‘shortest path,’ hence router-intensive designs. Green is good for the planet and for those of us in the optical communications business too!

Well, that’s my two penn’orth – any additional predictions, or comments on the above, are welcome and greatly appreciated.

I was invited by Rafik to do a guest post on Lightspeed. I considered various topics including the adrenaline rush we all get working on the “ragged edge” of accounting, but then it occurred to me that you can’t truly know Finisar without understanding our views on M&A. Finisar has used M&A extensively in developing its vertically integrated business model. In doing so, it has targeted a variety of companies, both private and public, big and small, foreign and domestic. To date, 12 transactions have been consummated in building our optics business although we looked at many more along the way and even backed out of a couple. And we have done so almost irrespective of the macroeconomic environment or stock price at the time of the transaction. As long as we felt the deal could be accretive within a relatively short period of time (generally one year to allow for restructuring although manufacturing synergies can take longer), then the transaction qualifies for consideration. Of course, pure technology deals can take longer to pay off and generally require that we take a healthy dose of skepticism before evaluating the opportunity.

How successful have we been with our M&A strategy? We ask ourselves that question all the time. We had a couple of false starts with respect to establishing an internal capability for building lasers (this is hard). And we had the chutzpah to announce a hat trick (3 deals at one time for those who don’t follow hockey) back in the internet bubble when we probably didn’t fully appreciate some of the integration issues you can run into. While some transactions have definitely worked better than others, we have never been shy about using M&A to sharpen our competitive edge. As noted in a recent Harvard Business Review article, “while M&A activity has been severely depressed since 2008 and fell dramatically in early 2009, acquiring companies during that period tended to outperform their industry peers in market valuation, according to a global study by Towers Perrin and Cass Business School examining 204 deals, each worth more than $100 million.”

In Finisar’s case, we have greatly expanded our product lines, patent portfolio and R&D capabilities through M&A. Our optics revenues have grown from just $47 million in fiscal 2000 when we became a public company to an annual run rate of over $580 million as of the most recent quarter reported and was headed higher based on our guidance at the last earnings call. In the process, we have become the world’s largest supplier of optics for communications applications. But “being big” is not what drove our M&A strategy. To understand what did, we need to take a walk down Finisar M&A Lane.

In the heady days of the internet bubble, we should remember that did not make any of the key components that were used to build our transceivers such as lasers or ICs. Furthermore we built all of our products using outside subcontract manufacturers instead of doing it ourselves. During that time, we were at the mercy of some of our competitors in terms of obtaining key components. Without an adequate source of supply, market share can suffer as key customers direct more of their orders to those who are most likely to supply enough product in the timeframe needed. In addition, attempts to introduce new products earlier than our competitors were compromised as a result of not having early access to new versions of those key components. Our experience from the bubble underscored the importance of vertical integration for certainty of supply and for accelerating product development while having our own off-shore assembly and test operation was going to be important in order to control access to our technology and exercise greater control over product quality while keeping costs low. It wasn’t until later that we realized that having an internal manufacturing assembly and test capability also gave us the ability to respond more quickly to upside surprises which happens almost irrespective of the economic environment at the time.

If we just look back at the goodwill we wrote off in fiscal 2009, you could reach the conclusion that we sometimes venture off the reservation. But goodwill impairments are almost inevitable given the macroeconomic cycles we must work through periodically. In the case of Optium, we entered into a merger agreement where we agreed to issue shares for a certain percentage of the combined company in May 2008 which determined the amount of goodwill that would be booked. The transaction was finally approved by shareholders in the fiscal quarter ended October 2008. During that same quarter, Wall Street went into a meltdown and the economic consideration of what we had issued was no longer supporting the amount of goodwill that was generated according to the rules of GAAP accounting. As a result, we were forced to write off all of the goodwill in the same quarter that it was generated. Would we have done the same deal had we fixed the exchange ratio much later when our stock price was lower? Of course we would, because Optium’s stock price would have been lower as well. A falling stock price does not mean the relative contribution of each party to the value of the total has changed. If we had done the same transaction later in the year when stock prices were lower, the amount of goodwill written off would have been considerably less or perhaps none at all. The fact that companies record a goodwill impairment is sometimes more a statement about the economy at the time the transaction was undertaken rather than a problem with the transaction itself.

So how successful have we been with our M&A strategy? I’d say good enough so we aren’t shy about considering new opportunities, but have earned just enough credits from Hard Knock U. to be very careful as we evaluate them.