Ciena Corp. this week said it is spending US$636 million to buy up broadband-access equipment maker Catena Networks Inc. and carrier-grade optical Ethernet vendor Internet Photonics Inc.
The Catena deal will bring Ciena products that traditional phone carriers are likely to buy in order to deliver broadband services such as DSL and fiber-to-the-curb or fiber-to-the-home. Internet Photonics' gear is aimed at cable operators and potentially phone companies to deliver Ethernet services that include voice, video and data on a single connection.
Ciena's CEO Gary Smith says the purchase of Catena will give his company access to more customers and also products that enable carriers to offer triple play - integrated voice, video and data - services. Internet Photonics' equipment allows cable operators to offer the same triple play services, Smith says.
Ciena already sells a range of optical transport and switching equipment for core, metro and edge applications. Its portfolio includes multiservice edge switches obtained through the purchase of WaveSmith Networks, core multiservice switches via an agreement with Equipe Communications, and edge routers through an investment in Laurel Networks. Ciena also has an investment in and reseller agreement with Luminous Networks to market its Resilient Packet Ring access equipment.
Both Catena and Internet Photonics beef up Ciena's access offerings, with customer premises equipment and service provider gear that collects customer access lines. Catena says its gear is in RBOC, CLEC and independent operating company networks.
Internet Photonics says six of the top 10 U.S. cable operators, including Adelphia and Cablevision, are customers.
According to a report by Current Analysis Inc., Ciena may be stretching itself thin.
"Ciena has been making numerous acquisitions and partnerships, all of which require integration with (Ciena management software) ON-Center for network management, as well as sales and marketing training," stated analyst Anna Reidy in a report on Ciena's investment in Luminous. "Ciena has also been downsizing to reduce costs, raising questions about the company's ability to complete the integration successfully and quickly."
Ciena is also losing money, recorded a loss of $76.7 million on revenue of $66.4 million for the first quarter ended Jan 31. The company competes with Alcatel SA, Lucent Technologies Inc., Nortel Networks Corp. and Siemens AG as well as a host of others including Adva AG, Marconi Corp. PLC, Sycamore Networks Inc. and Tellabs Inc.
Catena will become Ciena's broadband access group headed by Catena's CEO Jim Hjartarson. Internet Photonics will become part of Ciena's metro and enterprise group. Both deals are expected to close by the end of April.