Ciena CEO explains access strategy moves

Ciena plans to continue marketing, selling and supporting its broadband loop carrier (BLC) product, the CN 1000, in North America but not elsewhere, Chief Executive Officer Gary Smith said in an interview this week.

The equipment vendor announced in October that it was “reducing [its] investment” in the product, which Ciena obtained, along with some other broadband access gear, from its 2004 acquisition of Catena Networks.

Ciena decided to curb research and development on the product and stop selling it in Europe because the market there was too fragmented, with a mix of small customers, each wanting their own unique features and functions. The North American market is not as fragmented, he said.

“Everyone wants something different [in Europe],” Smith said. “You couldn’t get the critical mass required to get a good profit return on it. We’d have needed to make an enormous R&D investment to be successful there. Someone like Alcatel, they can aggregate the demand of multiple customers and markets.”

After cutting 119 employees from the former Catena facility in Ottawa, Canada, in its third fiscal quarter (which ended in July), Ciena held its total headcount to just under 1500 through October. But after its fiscal year ended on Oct. 31, Ciena cut the Ottawa workforce again. Though the company wouldn’t quantify the latest cut, the Ottawa Business Journal reported that 47 engineers, or about a fourth of the staff there, were let go in November, leaving less than 150 employees. However, a Ciena spokesperson said this week that the company now employs 170 people at the Ottawa facility.

The CN 1000 has made up a minority of Ciena’s quarterly broadband access sales (which have been in the mid $20 million range for the past two quarters), Smith said. It has been deployed domestically by, for example, North Carolina co-op Atlantic Telephone Membership Corporation.

Smith was bullish on the other former Catena products, the CNX-5 line of broadband access gear, which Smith hopes will capture some of the burgeoning market for IPTV infrastructure.