GARY SMITH, CIENA

Gary Smith is a hard guy to pin down. That's partly because he's been kiting around Europe so much lately, looking for the next carrier customer (“Until we hire a VP of sales, he's doing double-duty,” said one co-worker). But mostly it's because wherever he is, he wants to be somewhere else.

As president and CEO of Ciena, Smith is used to constant motion. The company barely had time to celebrate its success in making a market for optical cross-connects before the long-haul sector collapsed, and Ciena's $1.6 billion in 2001 revenues dropped to $361 million in 2002. “We were the world leader in that space,” said Smith. “We don't think it will return.”

To survive, Ciena had to go somewhere else. Smith went to Europe. And Asia. And Latin America. Overseas carriers aren't exactly flush with cash either, but like their American cousins they don't have an incumbent optical cross-connect vendor. Enter Ciena, which in May won a major account when British incumbent BT signed a three-year contract spanning the vendor's next-generation portfolio. Today, Ciena gets between 30% and 40% of its revenues from outside the U.S. Next year, Smith wants it to be more than 50%. But to him, the BT deal also signals an early milestone on his other promised path — the one that leads to the networks of large incumbent carriers.

To do that, Ciena moved into other parts of the network via its seemingly preferred mode of expansion: the acquisition. Past purchases took Ciena into the ADM, metro DWDM and highly lucrative grooming-switch markets (via Cyras, ONI and Lightera, respectively). And its $158 million purchase of WaveSmith Networks in April was not only an entry into multiservice and Layer 3 domains (giving Ciena the MPLS migration story most carriers want to hear) but also into RBOC networks, given that SBC Communications already was a WaveSmith customer. Analysts say there's little reason to think that RBOCs that buy WaveSmith gear will buy other Ciena products, but in this market, Smith will take what he can get. “Just getting the foot in the door — that's got to position you well for the future,” he said.

At a time when non-exclusive partnerships are in vogue as cheaper, non-committal alternatives to M&As, analysts have criticized Ciena's WaveSmith buy for being too aggressive — especially considering the disappointing returns from Ciena's $1.1 billion acquisition of Cyras. But partnerships don't give customers confidence, Smith said, and the sector hasn't shown so far that it knows the meaning of the word aggressive.

“This market is half the size it used to be, and yet there's been no major consolidation among the big players,” he said. “Something has to happen.”

Meanwhile, Smith will be looking to use data-centric edge-network gear to win more of the ILEC market. And he'll get it from whatever competitor has it now.

“If we're going to grow,” he said, “we're going to take market share from people by selling into places we don't currently sell into.”