Why Orckit stock jumped 135% on Wednesday: Putative pact with ECI
Communications equipment company is getting $4.5 million for an exclusive license to sell, manufacture and develop its products.
Orckit Communications stock shot up 135% in Wednesday Tel Aviv trading on turnover of NIS 6 million, several hundred times its usual trading volume.
The rise continued on Wall Street , as the stock jumped in similar fashion on 33 times its average volume of trade.
Early Thursday morning investors learned why the stock exploded: Orckit had reached an non-binding agreement with ECI Telecom under which it should get $4.5 million, pending the final accord.
The concept is that Orckit would grant ECI exclusive license to develop, manufacture, and sell all of its technologies, including Packet Transport technology.
If the final agreement is signed, Orckit will receive $4.5 million over the next four years as an advance on future royalties it will receive from future sales. In return, will continue to provide products and parts to be sold, developed, and manufactured by ECI.