Motley Fool  Aug 27  Comment 
A quick upgrade from analyst firm Raymond James lifted the long-haul networking specialist's stock on Wednesday.
TheStreet.com  Aug 26  Comment 
NEW YORK (TheStreet) -- Shares of Ciena Corporation  closed up by 9.49% at $22.33 on Wednesday, following a rating upgrade to "outperform" from "market perform" at Raymond James. Raymond James maintained its $27 price target on the...
Telecom Ramblings  Aug 20  Comment 
Here's a quick look at some other news from across the space that's worth a look. In a piece on its Beyond Bandwidth corporate blog this week, Level 3 is warning of a new DDoS attack vector. The company saw an otherwise helpful network utility...
Benzinga  Aug 18  Comment 
In a new report, Northland Capital Markets analyst Tim Savageaux discussed the trading opportunity associated with the current 100G optical upgrade cycle. Northland initiated coverage on a number of names in the space and sees a long-term cyclical...
Telecom Ramblings  Aug 4  Comment 
Several interesting items from the vendors to look at in the first half of this week: Ciena has polished off its acquisition of smaller rival Cyan. Ciena is rolling the software efforts of the combined company into a new Blue Planet division,...
Market Intelligence Center  Aug 4  Comment 
MarketIntelligenceCenter.com's patented algorithms have selected a trade on CIENA Corp (CIEN) that returns 16.11% in 164 days for an annualized return rate of 36%. This diagonal spread pairs a short position in the Jan. '16 $25.00 call, with a...
Telecom Ramblings  Jul 27  Comment 
It seems like just a year or two ago that 100G became commercially viable, yet technology has moved on already.  euNetworks today announced that it has deployed 200G, with the London metro area getting it first. euNetworks has tapped Ciena's...
Market Intelligence Center  Jul 17  Comment 
CIENA Corp (CIEN) is an excellent choice for either a diagonal spread or a covered call expiring in Jan. '16 at the $26.00 level according to MarketIntelligenceCenter.com’s patented algorithms. A covered call on Ciena for a net debit of about...
Cloud Computing  Jul 16  Comment 
Software-Defined Networking (SDN) is one of the most interesting developments in networking to emerge in the last decade. The potential to establish a simplified infrastructure and leverage software to dynamically modify existing flow...
MarketWatch  Jun 25  Comment 
The CEO of networking company Ciena, Gary Smith, offers five proven ways to combine two corporate cultures successfully.


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.[1] The company specializes in transitioning legacy communications networks to converged, next generation architectures, capable of delivering a broader mix of high-bandwidth services.[2]

Governments worldwide, including the United States, have been researching and proposing plans for nationwide broadband access.[3] 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.[4] 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.[5] [6]

Company Overview

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.[7]

Business and Financial Metrics

Second Quarter 2010 Results (ended April 30, 2010)[8]

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.

Business Segments

Optical Service Delivery

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.

Carrier Ethernet Service Delivery

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.

Unified Software and Service Management Tools

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.

Consulting and Support Services

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.

Trends and Forces

A Global Move to Establish Nationwide Broadband Connectivity

Called the "new global arms race" by Money Morning, governments worldwide have been establishing plans for nationwide broadband access.[9] 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. [10] 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. [11]

Increased Data Traffic From A Surge in Online Media

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. [12] In 2009, the London Times noted that YouTube has become the second most popular internet search engine in the world after Google.[13] 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.[14] 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.

Telecommunications Expansion Contracts Due to Decline in Economy

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.[15] 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.[16] 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:

  • Alcatel-Lucent (ALU-FR) Alcatel and Lucent merged in 2006 to create one of the largest telecommunications equipment vendors in the world with $21.8 billion in 2009 consolidated revenue.[17]
  • Cisco Systems (CSCO) Cisco is the worldwide leader in data-networking equipment and software, generating nearly $36.1 billion in revenue in FY 2009.[18]
  • Nortel Networks (NT) Nortel is a global supplier of networking hardware, software, and services designed to improve the way consumers and businesses communicate. It filed for bankruptcy in 2009.[19]

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.[20]


  1. http://www.moneymorning.com/2009/05/18/ciena-corp/
  2. http://www.secinfo.com/dsvRq.t4Zq.htm#_102
  3. http://reclaimthemedia.org/broadband/cable/obama_adviser_eyes_governmentb2722
  4. Seeking Alpha: Cisco Internet Traffic to Boom?
  5. http://gigaom.com/2008/12/04/with-att-job-cuts-telco-recession-is-official/
  6. http://www.marketwatch.com/story/gdp-set-for-4th-straight-decline-economists-say-2009-07-26
  7. Reuters: Ciena Corporation Company Profile
  8. Ciena Corporation Investor Relations: "Ciena Reports Unaudited Fiscal Second Quarter 2010 Results" June 9, 2010
  9. http://www.moneymorning.com/2009/05/18/ciena-corp/
  10. http://reclaimthemedia.org/broadband/cable/obama_adviser_eyes_governmentb2722
  11. http://news.cnet.com/8301-13578_3-10215603-38.html
  12. http://www.dtc.umn.edu/mints/home.php
  13. http://www.strangelove.com/blog/tracking-growth-rate-youtube-online-video
  14. http://seekingalpha.com/article/81653-cisco-internet-traffic-to-boom?source=feed
  15. http://gigaom.com/2008/12/04/with-att-job-cuts-telco-recession-is-official/
  16. http://www.fool.com/investing/general/2009/06/05/strike-three-is-ciena-out.aspx
  17. http://www.sec.gov/Archives/edgar/data/886125/000130817909000033/alcatel20f.htm
  18. http://www.cisco.com/web/about/ac49/ac20/ac19/ar2008/financial_highlights/index.html
  19. http://www.sec.gov/Archives/edgar/data/1119664/000119312509042559/d10k.htm#wrap17831_24
  20. http://finance.yahoo.com/q/co?s=CIEN
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