JDS Uniphase said it agreed to buy IBM’s optical transceiver business for $340 million in cash and stock, and based on the unit’s profits, may pay another $85 million in 2003. This is the second microelectronics business IBM has agreed to sell in the past month. In early December, IBM announced plans sell its Global Positioning System, or GPS, business to RF Micro Devices for an undisclosed amount. Microelectronics has been one of IBM’s weak areas this year, with its revenues falling 30 percent in the third quarter as an economic downturn weighed on demand and amid the worst year for the semiconductor industry since the 1980s.

Ottawa, Canada-based JDS Uniphase, a leading maker of fibre optic components for the telecommunications industry, said the purchase would enable it to move beyond telecommunications into the data communications markets. IBM spokesman Michael Loughran said that the about 100 employees who work for the Rochester, Minnesota, division will be offered jobs by JDS Uniphase. He added that the sale was part of normal portfolio management and consistent with microelectronic’s focus on servers, pervasive computing technologies and networking.

The purchase will expand JDS Uniphase’s business from long-haul communications to short-reach carrier and enterprise communications applications, the company’s top executive said.

“This acquisition immediately positions JDS Uniphase as a leading supplier of fibre optic solutions in the large and growing data communications markets,” JDS Uniphase chief executive officer Jozef Straus said.

The products in the business include small form factor transceivers and Gigabit Interface Converters for storage area networks and local area networks.

JDS Uniphase last week warned that sales would be weak not only in the second quarter ended Dec 29 but in the third quarter as well. That warning was the latest in a series of negative news from JDS, which announced a loss of $50.6 billion in the year ended June 2001 one of the largest losses in corporate history.

Reuters