Ciena goes to the edge

(Telephony) Having a complete equipment offering is critical to larger equipment vendors. For Ciena Corporation, it is critical enough to spend $2.6 billion in stock for Cyras Systems. Ciena intends to acquire the outstanding shares of Cyras in exchange for about 27 million shares of Ciena common stock.

Privately held Cyras Systems develops equipment for the network edge, whereas Ciena’s current strengths lie within the network core.

“This is an important strategy for Ciena. We have talked about this market sector for some time,” said Patrick Nettles, CEO of Ciena. “This is driven by customer needs and what they are prepared to act on.”

Ciena is betting that service providers need to enhance their metropolitan service offerings and capabilities. Analyst research firm RHK predicts the metropolitan market will yield $8 billion in 2001 and $11 billion by 2004.

“Now is the time to make this move,” said Gary Smith, Ciena’s chief operating officer.

Cyras’ K2 platform is a natural extension of Ciena’s platform, because it extends toward the edge, according to Smith.

“This increases our total addressable market and growth significantly,” Smith said.

Along with the company acquisition, Ciena will also assume Cyras’ outstanding debt of $150 million. Cyras’ 264 employees will become employees of Ciena, with Cyras CEO Alnoor Shivji reporting to Smith.