Ciena bounces back to life

After a substantial financial setback last year with the failed Tellabs merger, Ciena is on the upswing. The wave division multiplexing vendor hunkered down, focused on expanding its product line, acquired two manufacturers and recently announced two carrier contracts with coveted regional Bell operating companies.

Bell Atlantic and BellSouth said they are deploying Ciena's MultiWave Sentry system for long-haul interoffice fiber relief. Bell Atlantic installed the system in at least two central offices while BellSouth's initial deployments began in January and are used in 15-mile or greater applications. To date, about a dozen Sentry systems cover five BellSouth states, and the carrier plans to roll out at least 40 systems this year.

"It's an alternative to placing new fiber," said John Spencer, a member of BellSouth's technical, science and technology staff. "It gives us interoffice capacity, and [dense] WDM really gives us a time-to-market advantage over putting in new fiber." DWDM isn't always more economical than laying fiber-factors such as distance influence cost-and BellSouth will leave final deployment decisions up to its regional units, he said.

Winning the RBOC core contracts is a coup, though, said Scott Clavenna, principal analyst with Pioneer Consulting. "It's a slow market to develop," he added. "When [RBOCs] do finally choose a vendor, it usually indicates there is a significant market at bay." According to Pioneer research, the U.S. metro DWDM core market will climb from $100 million this year to $564 million by 2003.

And Ciena is well-positioned. The RBOC contracts give it credibility and validate Ciena's continued work, said Denny Bilter, director of marketing at Ciena.

"What we went through last fall with the merger collapse, it was pretty tough. But we're sticking to our game plan, which is to win more customers, diversify our customer base, and get into the local exchange market," he said.

The trades predicted Ciena's collapse, but market research indicated otherwise, Bilter added. "We read the [press] accounts of the demise of Ciena. The funny thing is the carriers did not believe that. They gave us the confidence to go on and persevere through this," he said.

Spencer agreed, noting that BellSouth evaluated the product, not the stock price.

Clavenna echoed that sentiment. "You can look back at the [merger] debacle as a stock market problem, not on Ciena's ability to develop and deliver good DWDM products," Clavenna said.

After several months of planning, it seems that Ciena is an overnight success. "We're on the right track," Bilter said. "We don't need to hang our heads. We pioneered DWDM. That's a phenomenal feat."