Ciena closes Nortel optical sale

Ciena Corp. has completed its acquisition of Nortel Networks Corp.’s metropolitan Ethernet and optical networking unit, hiring 1,400 former Nortel workers in Canada.

Linthicum, Md.-based Ciena agreed last fall to buy the Nortel units for US$769 million. The actual price US$773.8 million, but is subject to adjustment based on actual asset values.

Toronto-based Nortel, which lost money nearly every year since 1998, has been operating under bankruptcy protection since January, 2009.


Nortel sold its enterprise products to Avaya Inc. and its carrier wireless assets to Telefonaktiebolaget LM Ericsson last year.

Nortel’s Optical Multiservice Edge (OME) 6000 series switches will be the “flagship” product set of Ciena’s packet-optical transport group. Ciena said the OME 6500, which is designed to let carriers build multi-span links of more than 2,000 km, will let providers upgrade from 10 Gigabits per second (Gbps) to 40 or even 100 Gbps.

“Bringing these two companies together gives us the research and development engine … to execute on our vision of bringing optical and Ethernet together,” said Tom Mock, Ciena’s senior vice president of strategic planning. “Will execute on our strategy two to five years faster than we could have done. We will be the largest company focused on bringing optical and Ethernet together.”

When Ciena first announced the deal last year, one analyst described this as a  “bet the company move” for Ciena. Andrew Schmitt, directing analyst for optical at Campbell, Calif.-based Infonetics Research Inc., said at the time despite its financial troubles, Nortel was well regarded as a leader in 40 Gbps and 100 Gbps optical transport.

The products Ciena acquired did not include Nortel’s 15000 and 20000 Multiservice switches, but did include Nortel’s Optical Cross Connect DX switches. However, Ciena will incorporate the technologies from the Optical Cross Connect DX into its own switch line, Mock said.

“The primary switching platform going forward will be the Core Director family,” he said.

Core Director is part of Ciena’s packet optical switching system, which includes the 5400 family of Reconfiguable Switching Systems. This is comprised of the 5430, a 30-slot switch with 3.6 terabits per second capacity, scheduled to ship before the end of June. The 5410, which has 10 slots and 1.2 Tbps capacity, is shipping now.

“When you look at the amount of capacity that network operators are having to deploy now, one of issues they’re faced with is trying to find a way to deliver that kind of capacity increase without having to replace infrastructure,” Mock said. “You can now run 40G and 100G over infrastructure intended for 10G. You don’t need to lay new fibre and replace undersea cables.”

Ciena will inherit about 2,000 Nortel employees in total. Of the 1,400 Canadian employees most will be based in Ottawa but some will work out of Toronto and Montreal, said Mike Adams, Ciena’s senior director of portfolio strategy.

These include Philippe Morin, formerly president of Nortel’s metro Ethernet group, who is now senior vice-president of Ciena’s global products group.

“When we’re done with this, Ciena’s largest employee base will be in Canada,” Mock said. “One of the things that attracted us to Nortel was it gave us a pool of engineering talent and a pool of sales and service talent.”

Ciena is counting on customers to send more videos over the Internet.

“We love video,” Mock said. “Anything that drives bandwidth is generally good for us.”

Established in 1997, Ciena’s target market is telecom carriers. Its technologies include dense wavelength division multiplexing (DWDM) and carrier Ethernet.

It first offered to buy Nortel’s optical networking and carrier Ethernet units in Oct. for US $521 million but had to up its offer after Nokia Siemens Networks also bid on that unit.

As of February, Nortel in Canada employed 459 workers in its business services group and 75 in its corporate group. Its total head count worldwide was once more than 100,000 but dropped to 2,403 as of last month. It has raised about US$2 billion in asset sales.