Updated from 9:16 a.m. EST
unveiled plans Tuesday to buy privately held
, a maker of laser components for fiber optic networks.
The all-stock deal is worth roughly $1.43 billion, but Nortel says the value could be lower if CoreTek does not meet unspecified performance goals.
Nortel says it will use CoreTek's laser technology in its fiber optic networks. The technology, based on tiny, moveable mirrors, allows faster routing of data through networks. The all-optical technology is known to be significantly faster than older fiber optic switching techniques, which changed optical signals to electronic signals for switching, then back to optical for transmission.
Some analysts said that Nortel may be paying too high a price for CoreTek, and for its recent $3.25 billion
, a similar maker of optical switching technology. However, sources close to the deal said that Nortel will benefit first by integrating the new technologies into its own network, then by licensing the technologies to its competitors.
Shares of Nortel gained 3 15/16, or 2.6%, to close at 129 1/2 Tuesday.
CoreTek, based in Wilmington, Mass., has roughly 120 employees. The company's chief executive, Dr. Parviz Tayebati, will continue to lead CoreTek's development within Nortel Networks.
"CoreTek's capabilities are an important building block in our vision to transform today's Internet into the all-optical Internet of tomorrow," said Clarence Chandran, president of Nortel's service provider and carrier group.
Nortel, based in Brampton, Ontario, says that more than three-quarters of all North American Internet backbone traffic travels across its networks. The company is in the process of investing $660 million to build capacity for its networking and components business and to build a new laser fabrication facility in Canada.
advised Nortel on both the Xros and the CoreTek acquisitons.