Ciena snapped up Nortel's optical networking and carrier Ethernet business for $768 million in cash and convertible notes. Gary Smith, Ciena CEO, discusses the pluses and minuses of the deal.
“These optical and carrier Ethernet assets bring exceptional technologies, talent and scale that will accelerate Ciena’s current strategy to deliver innovative network solutions to customers worldwide,” said Gary Smith, Ciena’s CEO and president. “With this combination, we are bringing together complementary technologies in switching and transport to create an innovative powerhouse with the scale to challenge the industry status quo and offer customers a practical path for transitioning to automated, optical Ethernet-based networking. We will be intently focused on integration as we work together to deliver the benefits of this transaction to customers, employees and shareholders.”
“Ciena provides a natural fit for Nortel’s Optical and Carrier Ethernet assets, providing an environment where our businesses' expertise and technology can be grown and leveraged,” said Philippe Morin, president, Metro Ethernet Networks for Nortel. “The combination of our two organizations creates an industry powerhouse with a heritage of innovation and a shared commitment to building and maintaining reliable networks. With today's agreement, Nortel customers can be assured that they will be working with a known, trusted and experienced partner who can ensure continuity of supply and continue Nortel’s heritage of innovation.”
The assets to be acquired generated approximately $1.36 billion in revenue for Nortel in 2008 and $556 million (unaudited) in the first six months of 2009. Ciena expects the transaction to be significantly accretive to Ciena’s results of operations in fiscal 2011. Ciena is also expected to make employment offers to at least 2,000 Nortel employees to become part of Ciena’s global team of network specialists.