Ciena Corporation's (NASDAQ:CIEN) proprietary Dense Wavelength Division Multiplexing optics technology, a communications network product that carries and aggregates data, can obtain speeds of up to 100 Gigabytes per second, a first, and the fastest current speed in the world. The company specializes in transitioning legacy communications networks to converged, next generation architectures, capable of delivering a broader mix of high-bandwidth services.
Governments worldwide, including the United States, have been researching and proposing plans for nationwide broadband access. In addition, a large increase in internet traffic due to online video and file sharing has forced broadband carriers like AT&T to upgrade its network technology. As Ciena's products achieve the fastest speeds currently available worldwide, it stands to benefit from network upgrades. Still, economic conditions, such as a decline in GDP has forced many carriers to scale back expansion. 
Ciena Corporation is a provider of communications networking equipment, software and services that support the transport, switching, aggregation and management of voice, video, and data traffic. It is a network specialist targeting the transition of disparate, legacy communications networks to converged, next-generation architectures, able to handle traffic and deliver a mix of high-bandwidth communications services. The Company’s products, with their embedded, network element software and service and transport management, enable service providers to deliver critical enterprise and consumer-oriented communication services. In March 2010, CIENA Corporation acquired the optical networking and Carrier Ethernet assets of Nortel Networks Corporation's+ Metro Ethernet Networks (MEN) business.
Second Quarter 2010 Results (ended April 30, 2010)
Revenue for the fiscal second quarter 2010 totaled $253.5 million. Fiscal second quarter results include $53.5 million in revenue from the acquired assets of Nortel’s Metro Ethernet Networks business, reflecting approximately six weeks of operations since the March 19, 2010 acquisition date. In accordance with acquisition accounting rules, Ciena did not recognize certain deferred revenue of the MEN business that would otherwise have been recognized by Nortel had the acquisition not occurred. Revenue from Ciena’s pre-acquisition portfolio was $200.0 million, representing a 14% sequential improvement compared to fiscal first quarter revenue of $175.9 million, and a 39% improvement compared to the same period a year ago when Ciena reported revenue of $144.2 million.
Ciena’s net loss for the fiscal second quarter 2010 was $(90.0) million, or $(0.97) per common share, which compares to a GAAP net loss of $(503.2) million, or $(5.53) per common share, for the second fiscal quarter of 2009, which included a non-cash charge of $455.7 million for impairment of goodwill. The fiscal second quarter 2010 included $39.2 million in acquisition and integration-related expenses associated with Ciena’s acquisition of the MEN business.
The Company’s optical service delivery portfolio includes transport and switching platforms that act as automated optical infrastructures for the delivery of a variety of enterprise and consumer-oriented network services. These products address both the core and metro segments of communications networks, as well as key managed service and enterprise applications. The Company’s core switching product is its CoreDirector Multiservice Optical Switch. CoreDirector is a multiservice, multi-protocol switching system that consolidates the functionality of an add/drop multiplexer, digital cross-connect and packet aggregator, into a single, high-capacity intelligent switching system. CoreDirector’s mesh capability creates networks. In addition to its application in core networks, CoreDirector is also focused to be used in metro networks for aggregation and forwarding of multiple services, including Ethernet/TDM Private Line, Triple Play and Internet protocol (IP) services.
During the fiscal year ended October 31, 2009 (fiscal 2009), the Company introduced its CoreDirector-FS, an expansion of its CoreDirector offering incorporating its FlexSelect technology elements. It also introduced its 5400 family of reconfigurable switching systems. In nationwide networks, the Company’s CoreDirector switching elements are connected by a long-haul transport infrastructure. Its principal core transport product is CoreStream Agility Optical Transport System. CoreStream Agility is a scalable wavelength division multiplexing (WDM) solution that enables transport of voice, video and data related to a variety of services for core networks, as well as regional and metro networks.
The Company’s carrier Ethernet service delivery offering primarily consists of service delivery switching products and service aggregation platforms. This offering also includes its legacy broadband access products for residential services. These products allow customers to utilize the automation and capacity created by its optical service delivery products in core and metro networks and to deliver new, revenue-generating services to consumers and enterprises. The Company’s carrier Ethernet service delivery products have applications from the edge of the metro/core network to the customer premises. Its principal products for consumer broadband are CNX-5 Broadband DSL System and CNX-5Plus Modular Broadband Loop Carrier.
The Company’s optical service delivery and carrier Ethernet service delivery products include a shared suite of embedded operating system software and network management software tools that serve to unify its product portfolio and provide the underlying automation and management features. ON-Center Network & Service Management Suite, the Company’s integrated network and service management software, is designed to simplify network management and operation across its portfolio. ON-Center can track individual services across multiple product suites, facilitating planned network maintenance, outage detection and identification of customers or services affected by network troubles.
The Company offers a range of consulting and support services that help customers design, deploy and operationalize their services. It provides these professional services through its internal services resources, as well as through service partners. Its services portfolio includes network analysis, planning and design; network optimization and tuning; project management, including staging, site preparation and installation activities; deployment services, including turnkey installation and turn-up and test services, and maintenance and support services, including helpdesk and technical assistance and training, spares and logistics management, software updates, engineering dispatch, advanced technical support, and hardware and software warranty extensions.
Called the "new global arms race" by Money Morning, governments worldwide have been establishing plans for nationwide broadband access. In May 2009, Australia announced the most comprehensive plan to date; a $31 billion proposal that will bring broadband internet access to rural communities at taxpayer-subsidized rates and enhance the speed and intelligence of current networks.  Similarly, the United States' Congress has allocated $7.2 billion as part of its overall economic stimulus package to increase broadband penetration and coverage and to provide faster, more affordable service to as many Americans as possible. As part of the new legislation, the Federal Communications Commission has also been tasked with coming up with a national broadband policy. A move to smarter, faster networks nationwide will increase demand for high end fiber optics products, positioning Ciena as a top competitor for government contracts. 
The growth of online media -- from video sites like YouTube, file sharing platforms like BitTorrent, and online gaming -- has already led to massive increases in the amount of data traveling across the Internet. A study by the University of Minnesota found that worldwide internet traffic grew at annual rate of nearly 60% in 2008.  In 2009, the London Times noted that YouTube has become the second most popular internet search engine in the world after Google. Online video requires high bandwidth speeds and capacity, and has already required that carriers spend massive amounts to upgrade networks, benefiting Ciena. Cisco, the market leader in optics and broadband technology forecasted internet growth between 2007 to 2012 could increase as much as 46% per year, with a very large portion of that growth coming from video demand. Taking this into account, to keep up with customer demand, carriers will look to the best possible technologies. As Ciena has the fastest optics technology available, this gives it a comparative advantage over its competitors.
The economic recession that has affected the world economy since early 2008 has forced telecommunications companies to cut back spending, potentially reducing the number of new contracts for Ciena. In December of 2008, Ciena's largest customer, AT&T, announced it was cutting 12,000 job, or about 4% of its workforce. AT&T also announced that, moving into 2009, they were cutting capital spending. This is reflected in Ciena's second quarter results, which were down from the previous year and came in far below Wall Street's expectations. If the recession continues deeper into 2009, further cuts by Ciena's main customers in employment and expansion will potentially slow Ciena's growth.
Some of Ciena's main competitors include:
While Ciena is a much smaller firm in size compared to its main competitors, its gross margins were higher than those of Alcaltel-Lucent, and remain strongly competitive due to its proprietary technologies.