Cisco Evaluated Ciena, Decided Not to Buy, CEO Says
San Jose, California, Sept. 30 (Bloomberg) -- Cisco Systems Inc., the top maker of
computer-networking equipment, ''evaluated'' Ciena Corp. as an acquisition target
and decided not to buy the company, Chief Executive John Chambers said. ''At this
point there are no conversations going on'' with Ciena, Chambers said in an interview
at the company's headquarters in San Jose, California.
Ciena doesn't fit Cisco's acquisition profile because its corporate culture is too
dissimilar from Cisco's, and Ciena's Linthicum, Maryland, headquarters too far from
Cisco's, he said.
Turbulence in world economic and financial markets make a stock-swap agreement
with Ciena too risky, he said.
Phone-equipment maker Tellabs Inc. agreed to buy Ciena in June in a $7.1 billion
stock swap, yet the agreement was broken Sept. 14 after Ciena failed to win several
key contracts and missed earnings expectations. The shares of Tellabs and Ciena
plunged and the acquisition was called off. Ciena's shares have fallen 84 percent,
and Tellabs 55 percent, since July 20.
Ciena makes optical-networking equipment. Its so-called wavelength division
multiplexers expand the capacity of fiber- optic telephone networks by splitting beams
of light traveling along the fiber into multiple colors, or ''channels.'' 'Important Piece'
Chambers said optical networking gear is ''an important piece'' of Cisco's technology
strategy. Cisco now sells no such equipment, yet will acquire it through either a
technology partnership, a marketing agreement or an acquisition, Chambers said.
Cisco is looking to sell more Internet equipment to phone companies and other
telecommunications providers, pushing into a market also targeted by large
phone-equipment makers Northern Telecom Ltd. and Lucent Technologies Inc.
The existing research and development agreement between Cisco and Ciena,
unveiled in April, has yet to yield any new products ready for shipment, Chambers
said. ''They've been distracted,'' he said.
Separately, Chambers said the company's financial outlook for its first quarter ending
in October remains the same, even though Northern Telecom has warned of slower
European sales.
Northern said yesterday its sales growth will slow in the second half because of
weaker demand in Asia and Europe, where it lost several big wireless telephone
accounts.
French telephone-equipment maker Alcatel SA said on Sept. 17 that it would miss
earnings expectations for the year because of slowing sales to large European
telecommunication service providers, such as Deutsche Telecom and France
Telecom SA.
Alcatel, one of the largest European distributors of Cisco's data networking
equipment, said the large phone companies were buying less of its voice-switching
equipment. ''A lot of people are raising red flags (about Europe), but we haven't seen
that yet,'' Chambers said.
The shares of Cisco fell 2 13/16 to 61 13/16. Ciena gained 7/16 to 14 5/16.
o~~~ O |
