Calix announces partnership with Swedish tech giant

Petaluma networking equipment maker Calix announced a deal Wednesday to acquire a key product from Swedish technology giant Ericsson and absorb up to 61 of its workers in Silicon Valley.

Under the agreement, Ericsson will begin selling Calix products through its 180-country distribution network, anointing the Petaluma company as its preferred supplier of fiber-optic access technology used to connect homes and business to broadband networks.

The three-year partnership agreement will provide a "powerful channel" as Calix seeks to expand sales to new markets, said Carl Russo, the company's president and CEO.

The deal is expected to close in the fourth quarter. Financial terms were not disclosed.

As part of the agreement, Calix will acquire Ericsson's EDA 1500 broadband access system. The product is used by AT&T and other large telecommunications companies to deliver high-capacity data streams over fiber-optic lines, including high-definition television programming.

"That is highly valuable to us," Russo said in a conference call Wednesday. But the employees who developed the EDA 1500 "are even more valuable, because obviously those are the people that can do it over and over again."

The technology, he said, will complement Calix's own equipment that enables Internet service providers to connect to residential and business subscribers over fiber and copper-based broadband networks.

Divesting the product line will reduce Ericsson's fourth-quarter operating income by 400 million Swedish krona, or $60.3 million, the company said. Calix said it expected the deal would increase its profits, although it did not specify the amount in its announcement.

The deal was announced after U.S. markets had closed. Calix stock jumped 9 percent in after-hours trading Wednesday, to $5.75 a share.

Calix now has 660 employees, most of them at its headquarters in Petaluma.

With 100,000 employees, Ericsson supports telecommunication networks serving more than 2.5 billion customers. Forty percent of the world's mobile traffic runs through its networks.