Though optical transport equipment vendor Sorrento Networks was absorbed by Zhone Technologies in 2004, a new incarnation of Sorrento launched this month, acquiring those products back from Zhone. Its CEO Jim Nevelle spoke with Telephony about the startup’s plans.

The founders of the new Sorrento are actually not connected with the previous one. They formed an ad hoc company last year called Epix that acquired Sorrento’s old GigaMux line of metro optical gear from Zhone this month and acquired the rights to the old Sorrento name along with it because they found that it still had a good reputation in the market.

The GigaMux line that the new Sorrento just purchased from Zhone includes three wavelength-division multiplexing (WDM) products: the 6400, which Zhone obtained from Sorrento; the 1600, which Sorrento inherited through its acquisition of LuxN; and the low-end 50, which is often used by enterprises for point-to-point coarse wavelength-division multiplexing links.

Zhone acquired Sorrento for about $98 million (including about $70 million in stock and options and $27 million in assumed liabilities) in 2004. By 2006, however, sales of Sorrento’s gear were estimated to be flat and were expected to decline going forward along with Zhone’s other legacy gear. Last spring, Zhone applied some of Sorrento’s optical technology to its next-gen multiservice platform to create a new, more packet-savvy optical transport platform called FiberSLAM. Around that time, Zhone said the GigaMux line had been deployed in more than 3,000 nodes worldwide.

Despite that sales slump, increases in network traffic throughout last year have rekindled demand in the GigaMux, according to Nevelle. “The platform has had quite a resurgence over the second half of 2007,” he said. “All the carriers are being caught off guard. A lot of the customer base is coming back, upgrading from 1-Gb/s offerings to 10 Gb/s. Just start doing the math.”

Sorrento isn’t disclosing the terms of its deal with Zhone, its funding from private equity investors CHB Capital Partners and Silicon Valley Bank, its expected revenue or even its own head count. Its two top executives and co-founders, Nevelle and chief operating officer Tim Anderson (a former Carrier Access executive who knows Nevelle from Verilink, which was acquired by Verso Technologies) never worked at the old Sorrento. But the new incarnation does include Ergun Canoglu--a former executive at LuxN, which was acquired by Sorrento before the Zhone acquisition—and Zhone’s Chris Garcia.

As Sorrento builds up its product line (it is now talking to its nearly 100 mostly-U.S. customers about its roadmap), it will follow the same philosophy that Zhone has recently adopted—one that caused it to shed the GigaMux line: focusing on one part of the network (in Sorrento’s case, metro optical) rather than a broad portfolio for end-to-end networks. Sorrento may even acquire other vendors to grow, Nevelle said. “That’s not the number-one focus. We think there’s a lot of organic growth capability in what we have today. But obviously there’s a lot of interest with other telecom equipment providers that have conglomerate mindsets that are being pushed also [to divest non-core businesses]. So maybe there’s some other opportunities to expand through acquisition.”

Major carriers would be a key target for any vendor selling optical transport gear, but major carriers are typically averse to buying from small start-ups like Sorrento. Nevelle acknowledges that top-tier carriers will probably not install GigaMuxes in their core metro optical networks, but he thinks they will continue to deploy it in niche applications, for example making use of its storage area networking interfaces. And he imagines Sorrento’s sales to large enterprises will continue as well.

"Being that the new Sorrento will be a pure play in CWDM/DWDM, that is a strength in itself, as I forecast the WDM market to be the fastest growing segment of optical transport over the next five years," said Jason Suey, an analyst at Dell'Oro. "Pending on the relationships that Jim Nevelle and Tim Anderson have, it will be interesting [to see] the new markets and customers that these two are able to penetrate."