BW1422 MAR 15,1999 13:26 PACIFIC 00:26 EASTERN
( BW)(MD-CIENA)(CIEN) CIENA, Lightera and Omnia To Unite in
Revolutionary Combination
Business Editors
LINTHICUM, Md./CUPERTINO, Ca/MARLBOROUGH, Mass.--(BUSINESS WIRE)--
March 15, 1999--
The CIENA LightWorks(TM) Initiative: Delivering Carrier-Class
Optical Networking Solutions in Internet Time
CIENA Corporation (NASDAQ: CIEN), Lightera Networks Inc. and Omnia
Communications Inc., today announced The CIENA LightWorks Initiative, a plan to
change the fundamental economics of service provider networks. CIENA launched
this effort with agreements to acquire Lightera and Omnia, both privately held, in
two separate transactions valued collectively at approximately $980 million.
"CIENA has moved very swiftly and picked up two of the most exciting
companies in optical communications today," said Richard A. Shaffer, principal at
Technologic Partners. "CIENA, Lightera and Omnia are capitalizing on distinct
technological dislocations and are independently targeting critical areas of concern
for service providers. The combination is a powerful new force in the industry."
"The broadband network of the future will need high-capacity intelligent optical
transport and switching systems, and a new generation of access systems. With this
bold move, CIENA has all these key building blocks," says Dr. John Ryan, chief
analyst at Ryan, Hankin and Kent.
Building CIENA LightWorks(TM)
The introduction and widespread adoption of optical networking and dense
wavelength division multiplexing (DWDM) technology changed the economics of
bandwidth in service-provider networks and opened the door for high-capacity
services. CIENA's MultiWave(R) optical networking systems made it possible for
carriers to deploy bandwidth economically and efficiently. Increasingly, the
challenges faced by carriers become two-fold: managing and switching this newly
available optically-enabled bandwidth and delivering innovative high-bandwidth
services to customers.
"With the application of DWDM technology in our MultiWave systems, CIENA
successfully brought to market a dislocating technology - it changed the
fundamental economics associated with deploying network bandwidth," said Patrick
Nettles, CIENA's president and chief executive officer. "We believe the products to
be introduced by both Lightera and Omnia can have similar economic impact on the
costs associated with next-generation core switching and access respectively."
"The addition of Lightera and Omnia dramatically expands CIENA's addressable
market opportunity and augments our in-house efforts to broaden our product
lines," continued Nettles. "We believe both of these companies will have significant
advantages in what analysts have identified as rapidly growing markets. Combined,
we become uniquely positioned in the industry to offer complete optical networking
solutions that enable carriers to build simpler, smarter optical networks networks of
light, or lightworks."
Simply Smarter Light
At the heart of the new network infrastructure is CIENA's MultiWave optical
networking equipment and Lightera's intelligent optical core switching platform.
"Carriers need core network elements that meet or exceed WDM scalability and
keep pace with exploding bandwidth demands," said Jagdeep Singh, Lightera's
president and chief executive officer. "CIENA provides bandwidth; now service
providers need intelligent, dynamic provisioning and grooming. They need flexible
capacity management and a range of survivability options all at greatly reduced
capital and operating costs and at manageable risk."
Announced in early March, with commercial availability expected in the second
half of 1999, Lightera's Core Director intelligent optical core switch is targeted at
delivering scalable, ultra-high density, high-capacity switching, as well as real-time
provisioning with order-of-magnitude improvements in carrier infrastructure cost of
ownership. A suite of protection and restoration capabilities allows carriers to build
mesh, ring or hybrid mesh-ring optical cores without legacy SONET equipment.
"Lightera and CIENA share a vision of a flatter, more cost efficient next
generation network with far fewer network elements," explained Singh. "CIENA's
established footprint in carrier networks worldwide and the Company's reputation as
the leader in optical networking make CIENA an ideal partner for Lightera. With
Omnia's approach to service distribution factored into the mix the combination
becomes even more powerful."
Intelligent Service Distribution
"CIENA and Lightera have targeted the challenges at the core of the network and
together will provide scalable, survivable core bandwidth," said Michael Champa,
president and chief executive officer of Omnia. "The addition of Omnia creates a
solution that distributes network bandwidth and makes it possible for carriers to
offer and generate revenue from a variety of services tuned to specific customer
applications."
Omnia's AXR 500 is a next generation multi-service transport platform that
combines the functions of traditional transport equipment with advanced data
networking. The AXR 500 utilizes packet and cell technology to enable service
providers to deliver both legacy services and advanced high-speed data services
over an integrated optical infrastructure.
"Packet and cell technology combined with an integrated transport and access
platform means carriers can lower the hurdle rate for delivering multi-megabit
Internet services while supporting existing voice and private line services over their
current fiber optic infrastructures," said Champa. "By joining forces with CIENA and
Lightera, Omnia extends the reach of both our AXR 500 and CIENA's
MultiWave(TM) Metro(TM) - service providers can provision services from 64 Kbps
or DS0, to 60 Gbps on a common optical infrastructure."
Transaction Terms
Under the terms of the agreement with Lightera, CIENA will acquire all
outstanding shares of Lightera in exchange for approximately 20.6 million shares of
CIENA common stock. Under the terms of the agreement with Omnia, CIENA will
acquire all outstanding shares of Omnia in exchange for 16 million shares of CIENA
common stock.
The transactions are intended to be accounted for as pooling of interests
transactions and to qualify as tax-free reorganizations. Based on the closing price of
CIENA common stock on Friday, March 12, 1999, the Lightera transaction is valued
at approximately $552 million and the Omnia transaction is valued at approximately
$429 million. CIENA expects the transactions will become accretive during the
Company's fiscal year 2000, assuming expected revenue and cost synergies, as well
as expected product pricing.
The Board of Directors of CIENA, Lightera and Omnia have approved the
transactions. Shareholders of Lightera also have approved the transaction, and
shareholders holding more than 70% of the outstanding shares of Omnia have
agreed to vote in favor of the transaction when voted upon at a special shareholder
meeting. Subject to regulatory approvals and customary closing conditions, CIENA
expects the Lightera transaction to close in the March/April timeframe and the
Omnia transaction to close in the June/July timeframe. The transactions are not
conditional on one another.
Organization
Following completion of the transaction the Company will be organized into three
operating units, representing the current businesses of CIENA, Lightera and Omnia.
Patrick Nettles, CIENA's president and CEO will continue in that capacity for the
combined organization and will continue to head the operating division formed by
CIENA's current business. Jagdeep Singh, president and CEO of Lightera will
assume the role of Division President for the division formed by Lightera's business.
Michael Champa, president and CEO of Omnia will become Division President for
the business unit formed by Omnia's business. Both Singh and Champa will report
to Nettles. The companies' sales efforts will be combined and integrated under
CIENA's Senior Vice President Worldwide Sales, Gary Smith. In addition, upon
closing of the Lightera transaction, Singh will become a Director of CIENA.
NOTE TO INVESTORS
The descriptions and explanations of the revolutionary potential benefits of the
transactions identified in this press release represent forward-looking statements.
Whether such potential benefits will be realized, including the expectation of
earnings accretion during the Company's fiscal year 2000 and the related
expectation of revenue and cost synergies, is subject initially to closing of the
transactions, and thereafter to a number of material risks. The Company's actual
results may differ substantially from those implied by the forward-looking
statements due to the risks associated with integrating three companies at once, the
significant execution risk involved in bringing the Lightera and Omnia products to
commercial production, the challenge of key employee retention at all three
companies, and the intense competition from substantially larger companies which
the Company will face. The Company intends to address these risks in the context of
its regular public filings, and expects to do so initially upon closing of the first of the
two transactions--the Lightera acquisition--which is expected to occur in the
March/April time frame. The Company's current operations remain subject to a
number of risks, as discussed in more detail in the Company's Annual Report on
Form 10K as filed with the Securities and Exchange Commission on December 9,
1998, and in the Company's Quarterly Report on Form 10Q as filed with the SEC on
February 17, 1999.
About CIENA
Additional information about CIENA and its Lightworks Initiative can be found on
its worldwide Website: ciena.com
Based in Linthicum, Maryland, CIENA Corporation is a market leader of open
architecture, optical networking systems that form the core of telecommunications
networks worldwide. CIENA's networking solutions utilize bandwidth expanding
dense wavelength division multiplexing (DWDM) technology and include the
MultiWave(R) 1600 long-haul transport system, WaveWatcher(R) network
management software, the MultiWave Optical Add/Drop Multiplexer, the MultiWave
Sentry(TM) enhanced long-distance transport system and the new MultiWave(R)
Firefly and MultiWave Metro(TM) short-haul systems. Through its CIENA Services
subsidiary, CIENA provides a range of engineering, furnishing and installation
(EF&I) services for telecommunications service providers in the areas of transport,
switching and wireless communications.
About Lightera
Lightera Networks is a carrier core switch provider based in Cupertino, CA. The
company was founded in April 1998 to serve traditional long-haul carriers as well as
new IXCs. By mid-1999, Lightera will bring to market its intelligent optical core
switch, enabling highly scalable, flexible and reliable optical backbone networks.
Lightera solutions will give carriers the lowest cost of ownership. Experts from the
carrier and switch manufacturer domains lead Lightera's in-house optical network
engineering, ASIC design, high availability software development, and customer
field operations.
For more information about Lightera, visit www.lightera.com
About Omnia
Omnia Communications, Inc. is an emerging provider of access and transport
products that enable public network operators to deliver integrated communications
services over fiber optic access networks. Omnia's first product, the AXR 500, is a
multi-service access and transport platform with advanced quality of service (QoS)
technology that enables public network operators to deliver voice and data services
efficiently, offer advanced value added services, and reduce network deployment
and management costs. Omnia was founded in June of 1997, and was financed
through private investment from James Dow and venture capital from Charles River
Ventures, Bessemer Venture Partners, Atlas Venture, and STAR Ventures. Additional
information about Omnia may be found at its worldwide Website:
omnia.com
--30--eb/ny*
CONTACT: CIENA
Investor Contact:
Suzanne DuLong
(888) 243-6223
email: ir@CIENA.com
or
Press Contact:
Denny Bilter
(410) 865-8677
email: dbilter@ciena.com
KEYWORD: MARYLAND
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS COMED TELECOMMUNICATIONS
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