GEC buys Fore, expands U.S. presence

U.K.-based General Electric Co. last week picked up asynchronous transfer mode switch vendor Fore Systems for $4.5 billion, marking the second acquisition in as many weeks. The deal also solidifies GEC's place in the North American telecom industry.

In January, GEC sold its defense arm, enabling the company to concentrate on building up its telecom and information technology business. GEC's Marconi Communications division lacked the access and core technologies.

"Reltec brought us one piece that was missing in the jigsaw, and now we're buying Fore Systems. We believe we put that last piece in the jigsaw," a GEC spokesman said.

The combined solution set will establish GEC as a strong telecom player, said Donal Byrne, Fore's senior vice president of corporate marketing. "With the product portfolio GEC has at this point, if you compare it against Lucent and Nortel, we match up extremely well."

In terms of technology, that might be true, but market share is a different story. Nortel Networks and Lucent Technologies are very strong in North America, but GEC enjoys a "commanding presence" globally, Byrne noted. Fore and Reltec will bolster GEC's presence stateside, while gaining international distribution channels.

"Sure they can put together the technology, but they don't have the deep legacy relationships that Nortel, Lucent, and even Cisco is starting to develop with the large carriers," said Blaik Kirby, a principal with Renaissance Worldwide.

Although Fore is fostering its service provider business, it maintains a strong enterprise presence. "The real question is how much they continue to invest in the enterprise," said Joe Skorupa, director of switching and routing at RHK.