In another development emphasizing the importance of access and end-to-end solutions, CIENA Corp. in late February revealed plans to buy both access equipment vendor Catena Networks Inc., and Internet Photonics, an optical Ethernet transport and switching solution vendor.
The moves followed Nortel Networks’ announcement earlier the same week that it had partnered with access vendors Calix, ECI Telecom and KEYMILE to deliver end-to-end solutions to service providers.
“The acquisitions of Catena and Internet Photonics are part of CIENA’s ongoing efforts to fuel long-term revenue growth and sustained profitability by expanding our addressable market; capitalizing on new growth opportunities in adjacent and complementary markets,” says Gary Smith, president and CEO of optical equipment vendor CIENA, which recently announced a net loss for the first fiscal quarter of $76.7 million, or a net loss of 16 cents per share. “In the simplest of terms, these acquisitions enhance the scope of the solutions we can offer our customers and further extend CIENA’s network reach and presence.”
CIENA plans to acquire Catena in a stock deal valued at about $486.7 million. Catena will become CIENA’s Broadband Access group following the deal. The group will be led by Jim Hjartarson, president and CEO of Catena.
Internet Photonics also will merge into CIENA, and all the outstanding shares of Internet Photonics’ common and preferred stock, and employee stock options will be exchanged for shares of CIENA common stock. The value of that transaction is estimated at $150 million. Internet Photonics’ employee stock options will be converted into options to purchase CIENA shares.
Internet Photonics will become part of CIENA’s Metro and Enterprise Solutions group and will continue to operate from its Shrewsbury, N.J., and Marlborough, Mass., locations.
Both deals are expected to close by the end of CIENA’s third fiscal quarter 2004.
Through the Catena deal, CIENA gets a good base of access customers. Catena has deployed about 5,500 integrated broadband access solutions with RBOCs, major independent telcos and CLECs.
Catena’s products deliver voice, data and video services over both copper and fiber infrastructures. CIENA says it will couple those products with CIENA’s multiservice DN7 family to give carriers “a compelling offering to enable new DSL, voice-over-packet and passive-opticalnetwork services.”
Internet Photonics expands CIENA’s portfolio targeting multiservice operators and traditional carriers with the addition of a flexible platform for carrier-grade gigabit Ethernet solutions. Internet Photonics’ customers include six of the top 10 cable operators in the United States, including significant deployments by Cablevision and Adelphia, as well as carriers such as TDS Metrocom, that use Internet Photonics’ solutions to deploy Ethernet private-line services.
