Fiber Optic, Cable Companies Connect

Kathleen G. Tatterson

DAYVILLE, Conn. -- In a move aimed at taking advantage of the expanding fiber optic cable market, SpecTran Corp. of Sturbridge, Mass., and General Cable Corp. of Highland Heights, Ky., have formed a joint-venture company to develop, manufacture and market fiber optic cable.
SpecTran has sold 50 percent of its Applied Photonic Devices subsidiary to General Cable for $6.3 million. The resulting business, renamed General Photonics, will combine SpecTran's optical fiber technology with General Cable's sales and marketing network, explained Raymond Jaeger, chairman of SpecTran.
Under the terms of the agreement, General Photonics will purchase optical fiber from SpecTran's fiber technologies subsidiary. Also, General Photonics will use General Cable's sales and distribution network channels to market its cable products.
The new company will continue to make the fiber optic cable products previously sold under the Applied Photonic Devices name for data communications network, video, voice and other specialty applications.

Larger projects possible
According to Jaeger, the deal will allow General Cable's customers to purchase SpecTran optical fiber technology, and SpecTran customers will benefit from accessing General Cable's sizable sales and customer service channels. Customers of the former Applied Photonic Devices company can now deal in terms of larger projects and systems, he said.
The agreement represents part of SpecTran's positioning to capitalize on the ever-expanding fiber optic cable markets, according to senior vice president and chief financial officer Bruce Cannon. "Strong market conditions are making everything possible," he said. (See "Fiber, Fiber, Who's Got the Fiber? Shortage Hits Builders, Producers," Photonics Spectra, December 1996, p. 52.)
In another step toward its marketing goals, the company recently signed several senior note agreements and restructured an existing $22 million debt, providing a total credit line of $44 million. In addition, the company filed a registration statement with the Securities and Exchange Commission for the public offering of 1.8 million shares of its common stock.
"We will use these new resources for capacity expansion," Cannon added.
SpecTran reported earnings of $45 million in the third quarter of 1996, with estimated annualized revenue of $60 million. The company acquired Applied Photonic Devices in 1985.

The end of a trend
The joint venture represents the latest in a series of consolidations between fiber makers and cable makers, according to Jack Kessler, president of KMI Corp., the Newport, R.I., fiber optics market research firm. The trend started when Corning Incorporated's optoelectronics group joined forces with Siecor Corp., followed by AT&T with its own cable and fiber operations.
"This is probably the last fiber maker in the US to have a joint venture with cable operations," he said. "It will provide new opportunities for new markets, and both companies should benefit significantly without creating competition among General Photonics customers."