Sycamore outshines its acquisition

Sycamore Networks continued to grow revenue in its fiscal third quarter while the company it acquired last fall, Eastern Research (ERI), continued to contribute less.

In the quarter that ended April 28, 2007, Sycamore’s overall revenue was up 90% from a year earlier, but only about a fourth of that growth came from the company it acquired last fall. The optical equipment vendor reported $43.5 million in revenue for the quarter, $5 million of which came from sales of ERI’s multiservice access gear.

Sycamore paid $80 million in cash to acquire ERI last year.

Sales of ERI’s products have dropped from their 2005 levels, when they averaged about $15 million per quarter, prompting Sycamore to renegotiate the price it agreed to pay for the company last fall. Following the acquisition, Sycamore discontinued ERI’s OX8000 optical crossconnect, which was unveiled in June 2005 but still in “development stage” at the time of the acquisition, Sycamore said.

“We believe that the addition of ERI’s products, technology and workforce will help us broaden our customer relationships, expand the markets we serve and leverage our core strengths to offer a more comprehensive suite of solutions optimized for emerging broadband networks, ” Sycamore said in regulatory filings this week.

Earlier this month, the company shed 46 employees, or about 10% of its workforce.