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Technology Stocks : Ciena (CIEN) -- Ignore unavailable to you. Want to Upgrade?

To: John F. Dowd who wrote (6759)	3/16/1999 12:18:00 AM
From: pat mudge	Respond to of 12623

From EETimes: Ciena spends nearly $1 billion for Omnia, Lightera By Loring Wirbel EE Times (03/15/99, 4:43 p.m. EDT) LINTHICUM, Md. — Ciena Corp. on March 15 stole a page from the book of European telecommunications OEMs, electing to acquire two optical-transmission startups at once, in order to move from passive dense wavelength-division multiplexing (DWDM) directly into Sonet transmission and optical path routing. The offer to acquire Omnia Communications Inc. (Marlborough, Mass.) and Lightera Networks Inc. (Cupertino, Calif.) puts Ciena in a position to handle all aspects of data-centric terabit bandwidths in transmission backbones — not just the multiplexing of light waves, but the mapping of asynchronous-transfer-mode cells to Sonet virtual paths, as well as the routing of light waves in optical cross-connects and add-drop multiplexers. Ciena is paying a total of $980 million in stock swaps, representing approximately $552 million for the Omnia transaction and $429 million for Lightera. The bold move represents a sharp contrast to Ciena's position nine months ago, when the company was itself to be acquired by Tellabs Inc. (Lisle, Ill.) for $6.7 billion. The collapse in Ciena's stock price last August, caused by a loss of key contracts that some analysts tied to a possible whisper campaign led by the Lucent Technologies Inc. sales staff, scotched the deal with Tellabs. Since that time, Ciena slowly built up its business and stock price, and now has moved to be acquirer rather than acquisition target. Ciena reported a small profit in the first calendar quarter, but its stock fell 2 1/16 by midday Monday, to $24.75, after news of the acquisitions hit the trading floor. Ciena is the third company in as many weeks to acquire multiple startups in the routing and switching backbone, though it is the first to focus directly on optical transmission. Alcatel SA picked up Xylan Corp. and Assured Access Inc. two weeks ago, while Siemens AG snared Argon Networks Inc. and Castle Networks Inc., as well as making an investment in Accelerated Networks Inc. In all cases except Xylan, the smaller companies were acquired before their first products had moved into volume production. Like Lucent, Nortel Networks Inc. and Cisco Systems Inc. before them, the acquiring companies appear to be dispensing with some levels of internal product R&D in favor of snapping up startups before they bring products to market. Patrick Nettles, chief executive of Ciena, said that "the larger companies will have an even more difficult retention-of-talent issue than we will face, particularly those equipment manufacturers based in Europe. One of the exciting things in our deal is the absolute commonality of vision in the three companies." Nettles predicted that there will be no layoffs involved in the merger, but some charges will be anticipated. Nettles stressed that Ciena was not seeking to sell the company in 1998, and had not been desperate in any sense when Tellabs made its offer. The new Omnia and Lightera offers represent a common interest in building optical backbones, stemming from a belief that "TDM (time-division-multiplexed) networks just didn't scale to terabit class." Omnia, developer of the AXR 500 Sonet access system that employs ATM quality-of-service bandwidth shaping, has a metropolitan system that would interface with Ciena's MultiWave Metro DWDM system. Michael Champa, president and chief executive of Omnia, predicted that at least one generation of separate AXR and MultiWave Metro products will be developed, but that a natural evolution would be to combine short-haul DWDM and metropolitan access products. Champa will become general manager of a new access division at Ciena. Lightera, which only introduced its products last week uses a mesh-based cross-connect/section-regeneration switch architecture, CoreDirector, capable of scaling to 40 Tbits/second in performance. Ciena executive vice president Steve Chaddick said that his company and Lightera share the view that it is far more cost-effective to pursue electronic-based optical path switching for broadband networks than to pursue short-term development of true optical-domain switching, though Ciena intends to maintain long-term development efforts in the latter category. Jagdeep Singh, president of Lightera, will stay with Ciena and become general manager of the optical routing and cross-connect product lines.