Ciena buys into storage

During its third quarter conference call Thursday morning, optical equipment vendor Ciena announced it had reached an agreement to acquire Akara, a Delaware startup that sells Sonet/SDH-based extended storage area networking systems.

Akara, which employs 50 people will merge with a wholly owned subsidiary of Ciena exchanging all of its stock for $45 million--$31 million in cash and $14 million in Ciena common stock.

The move comes amid continued pressure on Ciena’s core optical revenue market. “It’s clear that carrier spending in the core is likely to stay flat,” said Ciena CEO Gary Smith. “We must look outside our traditional markets and identify growing markets that enable us to leverage our existing customers.”

“Ciena had previously demonstrated this strategy in its acquisition of multi-service equipment vendor WaveSmith Networks earlier this year.

In a research note Thursday morning, Lehman Bros. analyst Steve Levy called the acquisition “another risk.” He also predicted it would be followed by more Ciena acquisitions, a sentiment Smith confirmed in the conference call.

“Acquisitions and partnerships will continue to be a driving force in Ciena’s market expansion strategy,” said Smith.