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If its acquisition of carrier Ethernet and optical assets of Nortel goes through as planned, Ciena expects to push its way into a top-three position in the market for carrier Ethernet switches and routers, the company’s VP of Strategic and Industry Marketing John Marson said. The market is currently dominated by Cisco, Alcatel-Lucent and Huawei, according to market analyst firm Heavy Reading.
“A couple of years ago Ciena declared a very public strategy to be a leader in emerging optical (and carrier) Ethernet space,” Marson said. “This allows us to really leapfrog that strategy of ours by a good 2-3 years.”
Ciena announced on Monday that it became the successful bidder in an auction to sell most carrier Ethernet and optical business assets of once dominant but now bankrupt Canadian telecom equipment maker Nortel. The company filed for bankruptcy in January of 2009.
The buyer’s winning price is US $530 million in cash and US $239 million in debt securities, according to a Ciena statement. A bankruptcy court is expected to hear a motion to approve the acquisition in early December and the deal is subject to “additional regional regulatory clearances and customary closing conditions.”
Ciena expects to close the transaction in the first quarter of 2010.
Marson said he did not expect the acquisition to gain Ciena any new competitors in terms of product portfolio, as the company has been in the optical and carrier Ethernet market all along.
“It doesn’t really bring products or technologies or businesses that are really foreign to Ciena,” he said. “If I take a look at all the possible players that were rumored to have been considering (acquisition of the) assets, we were the only pure play optical and carrier Ethernet players in the space.”
The transaction (if successful) will bring Ciena into new geographical areas, adding customers in the Caribbean and Latin America, as well as expanding its customer base in Canada – where Nortel has dominated historically. Nortel has also been investing in several pockets of the Asia-Pacific region – investments that will now benefit Ciena’s position in those markets.
According to Heavy Reading’s report on the carrier Ethernet equipment market, the space enjoyed a five-percent quarter-over-quarter growth in the second quarter of 2009. In a Sept. 30 statement, the firm assessed the market’s size to be about $452 million and projected that it would grow to about $2.78 billion by 2013.
That growth will be spurred by “underlying market fundamentals favoring a shift from legacy Sonet/SDH- and ATM-based networks toward high-performance carrier Ethernet/MPLS-based networks.”
Carrier Ethernet technology recently received a boost from Equinix, when the global colocation and Internet exchange service giant announced that it was developing a carrier Ethernet exchange platform that would be deployed in its data centers.
“We’ve seen various carrier technologies come and go,” Equinix Director of Innovation Jonathan Lin said in an interview in October. “Ethernet is number one topic on everyone’s mind. It’s definitely a huge growth area for (carriers).”
The Equinix platform will be supported by routers provided by one of Ciena’s rivals, Alcatel-Lucent.
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Keywords: Ciena, Nortel, Nortel bankruptcy, Nortel asset auction, carrier Ethernet, carrier Ethernet switch, carrier Ethernet router, CESR market | | 
