Ciena Corp. (NYSE: CIEN) might want to downplay it, but in terms of revenues, the company would overlap substantially with the Nortel Networks Ltd. Metro Ethernet Networking (MEN) business.

Ciena repeatedly used the word "complementary" in discussing today's $521 million bid for MEN. (See ITU: Ciena Bids $521M for Nortel's MEN and Smith: Why Ciena Wants to Reign Over MEN .)

But when it comes to where each company makes its money, there's a lot of overlap, Heavy Reading analyst Sterling Perrin points out in a research note published today.

Looking at individual products, there's a lot of difference between Ciena and Nortel. Ciena's CoreDirector doesn't have an analogue inside Nortel, and Nortel has a multiservice Sonet/SDH business that Ciena lacks (more on that later).

But the companies share an interest in WDM transport. And in 2008, those products represented 53 percent of Ciena's revenues and 55 percent of Nortel's optical revenues, Perrin writes.

Table 1: Ciena/Nortel WDM Overlap

"Given these high percentages, the overlap in product lines should not be easily dismissed," he cautions.

Perrin, by the way, has long been in the thumbs-down camp when it comes to matching Ciena with MEN. "We continue to believe that Ciena would be better off without the Nortel acquisition," he writes.

That's not to say the deal would be all wrong for Ciena. Perrin and other analysts acknowledge that Ciena could gain from this deal by broadening its product offerings and picking up new customers, including Nortel enterprise clients that were otherwise out of reach.

Then there's that multiservice Sonet/SDH business. It's a legacy business, worth $396 million to Nortel in 2008 but filled with customers ready to upgrade to WDM gear. Ownership of MEN wouldn't guarantee Ciena those upgrades, but Perrin says Ciena told him it would rather fight for those upgrades as an incumbent, not as "the insurgent trying to break in."

"It is likely that this is the strategy Ciena has in mind for BCE Inc. (Bell Canada) (NYSE/Toronto: BCE) and Telus Corp. (NYSE: TU; Toronto: T), both of which are major Nortel customers," Perrin writes.

A MEN acquisition could also push Ciena forward in its 40-Gbit/s and 100-Gbit/s efforts.

Even though Ciena has already made a mark in 100 Gbit/s, Perrin suspects that the company has come to prefer Nortel's 100-Gbit/s technology to its own, based on talks he's had with management. And it's possible Ciena would like to own a 40-Gbit/s technology (Nortel's is home-grown) rather than continue to buy it from Opnext Inc. (Nasdaq: OPXT), he writes. (See Ciena Pushes 100-Gig and Ciena Sending 100GE Live.)

Whether it's all worth it to Ciena is still up for debate, though. In the year since Nortel first tried to sell MEN, some of the shine has come off, says Simon Leopold, an analyst with Morgan Keegan & Company Inc.

"Buying this Nortel asset is like buying a used car. You know it's a used car, but you're not sure: Has it been in an accident? Is everything working right? We know some talent has left, and we know that the value's declined. We know it's damaged goods, but we don't know by how much," Leopold says.

— Craig Matsumoto, West Coast Editor, Light Reading