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DWDM

Ciena Streamlines Sales

A slowing economy and disappointing sales are taking their toll on Ciena Corp.'s (Nasdaq: CIEN) management roster, Light Reading has confirmed. At least three Ciena vice presidents have either left or are winding down their jobs, as the company strives to makes its sales force more efficient and effective.

Michael McCarthy, Ciena's senior VP of worldwide sales and support, has left Ciena, and CEO Gary Smith has assumed his duties until a replacement is found. Other coming departures include Claude Achcar, Ciena's Asia Region VP, and Arely Castellon, Ciena's VP and general manager for Latin America and the Caribbean.

"The focus of the company has changed," says Glenn Jasper, a Ciena spokesman. "Because of the downturn, over the past several months, we've focused more on the top 30 carriers or so in the world. It's not a matter of administration -- it's a matter of targeting those carriers."

Over the years, Ciena's sales management has taken many shapes. Many close to the company say McCarthy's appointment had always been a source of intrigue. Ciena critics wailed when McCarthy, a career lawyer, was handed a sales job by Smith, a rookie CEO, in May 2001.

McCarthy replaced Chris Simpson, who only held the job for about a year. Simpson is now with Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7).

The shape-shifting occurred at other levels, too. One post that did not survive Ciena's restructuring is that of the VP of North American sales. Richard Bibb held the job from November 1999 to June 2000. He was succeeded by Barbara Blanck, who took the post in February 2001 (see Ciena Picks N. American Sales Chief). Blanck, however, quietly left the company more than a year ago. That particular blank has not been filled.

Achcar and Castellon find themselves in similar positions now, as the structure of Ciena's sales management becomes more about big-name carriers and less about geographic territories. Castellon has been with Ciena since March 1999; Achcar led Ciena's Asian headquarters, which opened in June 2001 (see Ciena Opens Hong Kong Office).

Changes in Ciena's sales force are hardly surprising, given that during Ciena's most recent quarter, the company posted a disappointing net loss of $160 million on revenues of $50 million.

Not only did Ciena turn in low revenues for the quarter, it also missed Wall Street's revenue expectations by nearly $20 million (see Ciena Follows the Incumbents). On the conference call, CEO Gary Smith said the company would focus its sales efforts on incumbent carriers -- both in the U.S. and abroad.

A while later, Ciena announced it was firing about 450 employees, roughly 17 percent of its workforce, in order to control costs (see Ciena Cuts 450 Jobs).

In recent years, the top sales jobs have churned often at Ciena, former employees say. "Ciena has prided itself as being a tech company, and they don't have an appreciation for sales or marketing and have not spent enough time grooming talent there," says one former Ciena executive.

"I wonder if this [change] presages more head cuts," says Gina Sockolow, an analyst at Buckingham Research Associates (BRA). "The Street's been all over Ciena to slow their cash burn."

Ciena's next earnings announcement comes in early December. The company's shares were down $0.45 (11.4%) to $3.50 in trading on Monday.

— Phil Harvey, Senior Editor, Light Reading
www.lightreading.com Movers and shakers from more than 100 companies – including Ciena Corp. – will be speaking at Lightspeed Europe. Check it out at Lightspeed Europe 02.

cameleon 12/4/2012 | 9:21:17 PM
re: Ciena Streamlines Sales Man, the stock is gowing up. 13% a day ..
The internal sources say that the company
has met the numbers for the quarter and have
some good/big news in the pipeline. wonder
whats that ?? any ideas ....
zettabit 12/4/2012 | 9:21:30 PM
re: Ciena Streamlines Sales Chad Whalen is still at Ciena and is sort of acting as VP of North America sales. It is highly likely that he himself may be leaving in the near term.

Internally Ciena is going through real tough times and people are having a lot of difficulty coming down from the high of 2000.

The biggest difficulty has been the sudden revenue ramp-down in 2002, partly due to the extremely poor customer pipeline visibility being provided by Mike McCarthy - hence no more job for him.

Corporate strategy is being led by a very small and closed insider group of Smith, Chaddick, and a few others. The ONI senior management is either gone (Martin, Evans) or meaningless (Sharma), although ONI's metro WDM revenues are one of the few stable revenue streams coming into the company today - better not #$&%@ with it!. And Cyras is not going anywhere, leaving the remaining revenue dependence on either new CoreDirector sales (which will be tough, because this will require new customers, as existing deployments have enough capacity to last 1-2 years) and CoreStream, which as a core Long-Haul DWDM platform will have to await a carrier backbone recovery and new build-outs, which will not happen in any meaningful way until 2004 at the earliest.

Tough times again, and expect more downsizing as the reality of the next 18 months revenue run rate sinks in.
bigdaddy 12/4/2012 | 9:21:41 PM
re: Ciena Streamlines Sales "I could have sworn I met a guy named Chad that was introduced as the VP of NA sales. Is he down a rung or two, or just "acting" during one of the gaps"

You are right: Chad Whalen. Anybody know what happened to him?


Uh Oh, Looks like we have another chad problem!

Just an actor, for now.
achorale 12/4/2012 | 9:21:44 PM
re: Ciena Streamlines Sales TelcoEngineer wrote:

"I could have sworn I met a guy named Chad that was introduced as the VP of NA sales. Is he down a rung or two, or just "acting" during one of the gaps"

You are right: Chad Whalen. Anybody know what happened to him?
TelCoEngineer 12/4/2012 | 9:21:46 PM
re: Ciena Streamlines Sales I could have sworn I met a guy named Chad that was introduced as the VP of NA sales. Is he down a rung or two, or just "acting" during one of the gaps?
TelCoEngineer 12/4/2012 | 9:21:46 PM
re: Ciena Streamlines Sales ....and how they are about to be dropped by Sprint, please?

***********

What makes you think they are being dropped by Sprint? Longhaul transport, OXC or both?
Belzebutt 12/4/2012 | 9:21:48 PM
re: Ciena Streamlines Sales NT is 10-20 times the size of Ciena

My point exactly. Ciena's sales used to be in the same order of magnitude as Nortel. Now they're almost two orders of magnitude below! Seems like while NT and LU fell, Ciena desintegrated.
optigirl 12/4/2012 | 9:21:48 PM
re: Ciena Streamlines Sales You are correct in your point. LU, NT, etc have diversified product segments so they can at least sell more than just LH DWDM and OXCs. Perhaps this is the pitfall of being a niche player. If you are successful in a growing market then you stand to do quite well but when that niche goes, so don't you. Ciena has real problems that are not just from a market downturn. They have made a bad acquisition in the K2 box, their management does not seem to understand how to service big accounts and the lack of leadership at the top, starting with Gary Smith, is killing the company.

Perhaps it is time to consider a change at the top?
Elvis Doesn't Live 12/4/2012 | 9:21:49 PM
re: Ciena Streamlines Sales Ciena had a WDM contract with Verizon that was worth several hundred million dollars over a few year's time. VZ wanted enhancements on the products regarding Amplification that Ciena wouldn't come through on for some reason. As such, Ciena has been limited to selling a few systems here and there but nothing more. They are no longer looked upon as a trusted source up there. Bellsouth has had poor experiences dealing with them as well and as such does not consider them as a viable company to purchase from. ONI was making its own headway prior to merger but from what I understand, Ciena no longer carries much credibility with key people who handle RFP and planning. Sprint went with Tellabs 6500 over Ciena when they needed cross connects. The story is that Ciena has done a royally good job of not delivering the types of products its major accounts wanted and not to mention giving them a take it or leavce it attitude on products and pricing.

My intel anyway,......
Phonon-Ex 12/4/2012 | 9:21:50 PM
re: Ciena Streamlines Sales Elvis

I agree with what you are saying. Ciena no longer has a competitive edge. But can you expound a little on how they screwed up Verizon and BellSouth, and how they are about to be dropped by Sprint, please?

PEX
Mech4 12/4/2012 | 9:21:53 PM
re: Ciena Streamlines Sales Belzebutthead...
this was on faily small contract.....can't spell and can't add.

NT is 10-20 times the size of Ciena and you are comparing a $5M/q contract with $50M q revs.

It is clear why NT is in the mess they are in.
Mech4 12/4/2012 | 9:21:53 PM
re: Ciena Streamlines Sales slightly confused....

Chris Simpson (note: Avici's sales success) ran sales during their $1.6B fiscal year and was pushed out for being too hard on subordinates and disagreeing with Smith. He was VP of global sales and brought in Blanck who never had a clue or sales experience and when she realized what she got into decided it was time to retire gracefully. She ran a services org. prior to Ciena, not sales. Moser really runs the sales there and if ya know him, ya know what the problems are.
Mech4 12/4/2012 | 9:21:54 PM
re: Ciena Streamlines Sales
Just look at the ages of senior mgt..... Very little experience running a major company. Smith is surrounded by yes people and the group think is deafening. Time for Dr. Nettles to straighten this ship or y'all can fugetaboutit.

Next layoff is right around the corner, can you really expect morale to be anything but crap?

Btw, your guesstimate on Captain "do it my way"'s compensation should be quadrupled as he set himself up with a nice $3M bonus. Good deal if you can get it.
Belzebutt 12/4/2012 | 9:21:55 PM
re: Ciena Streamlines Sales Your precious $65M contract is across 3 years dumb-a**. That translates to only slightly over $5M a quarter, not to mention the negative margin you had to go to not loose that deal.

I clearly stated that this was on faily small contract, I just used it as an example. Yet, this one contract is larger than Ciena's quarterly revenues. As for negative margins, NT's margins are quite good compared to competitors and climbing.
Elvis Doesn't Live 12/4/2012 | 9:21:58 PM
re: Ciena Streamlines Sales However, Ciena sends out press releases touting insignificant wins in markets that they are not going to do much with anyway. And, like Ciena isn't grabbing its ankles on the deals it is doing?

The point is NT, LU and CSCO do deals measured differently than Ciena. Hell, these companies do deals measured in the hundreds of millions fairly regularly. Ciena no longer can.

Face it, Ciena sucks!!!!!
Litewave 12/4/2012 | 9:21:58 PM
re: Ciena Streamlines Sales Author: Belzebutt
...Today, Nortel announced a $65 million contract, compare this to Ciena's $50 million quarterly revenues


Another shining example of Nortel's PR hype and the fact that only the folks that failed at math are left at Nortel.

Your precious $65M contract is across 3 years dumb-a**. That translates to only slightly over $5M a quarter, not to mention the negative margin you had to go to not loose that deal.
Dorsal 12/4/2012 | 9:22:04 PM
re: Ciena Streamlines Sales Meanwhile they are obsessed with the litigation against Corvis. Any word on how that is progressing?
Elvis Doesn't Live 12/4/2012 | 9:22:04 PM
re: Ciena Streamlines Sales They talk a good game up at Ciena that's for sure but most of it is fueled by whatever blend of Kool Aid they are drinking.

The emperor simply will not listen to anyone who tells him that he has no clothes and has made a point of erasing anyone who goes against the grain. His minions in the pr department spend their days thinking up lame angles to sell to the press and analysts. There seems to be a major emphasis on pushing hype, marketing spin and propaganda. What they should be concerned with is how to build and sell products to the BOCs. They screwed up Verizon and BellSouth is not going to buy anything from them. They should also ask themselves why are they losing Sprint?
Belzebutt 12/4/2012 | 9:22:04 PM
re: Ciena Streamlines Sales Time to ask "what happened"...

Ciena used to be the darling of the optical industry, the up-and-comer who was about to trounce Nortel as the optical leader, with yearly sales of something like 1.4 billion. Today, Nortel announced a $65 million contract, compare this to Ciena's $50 million quarterly revenues:
http://www.lightreading.com/do...

And this is a relatively small contract too. Everybody talks about how bad it is at NT and LU, but boy, looks like Ciena's fall was much harder.

Remember the thread about how when you got hired by Ciena you had to sign that you won't work for a competitor for... what was it, 2 years? Oh boy the good old days.
opticaltalent 12/4/2012 | 9:22:05 PM
re: Ciena Streamlines Sales
Bibb left Ciena to go to Redback and Barbara Blanck took over for him. She left on paper b/c of "personal reasons" but she was not qualified to sell to carrier execs b/c she lacked any sort of technical background and/or understanding of the carrier's network (she was a VP of Sales at Sprint for years). Ciena brought in a former Nortel VP a couple months before Supercomm who I think used to work Verizon, left that account b/c of a clash with the MAVP and worked the "Emerging Carrier" space, and then took a package after a short time after leaving the Verizon account team. Supposedly he brought in another Nortel person to help sell to the RBOCs. To my knowledge Blanck's position was filled earlier this year is the point contrary to what the article says.

At any rate Ciena's sale strategy to the carriers and turnover at the VP level is a greek tradegy. Never really committed to selling to the RBOCs nor understood how to sell to them.
Elvis Doesn't Live 12/4/2012 | 9:22:07 PM
re: Ciena Streamlines Sales The news that continues to flow out of this company is saddening. The revolving door at the senior sales level is astonishing. How how can that butthead Smith put a lawyer in charge of sales, have no VP of NA Sales and lose that many key people? Maybe because he used to run sales himself? Hmmmmm

Let's see, core market is off, let's buy technology that doesn't work like the K2. Or, let's invest in ATM switching companies even though we know nothing about that market. Or, lets go into the enterprise business even though we don't know anything about that. Or, how about we start chasing an all Optical Networking strategy that I have heard rumblings about?

Morale up there really stinks I hear and plenty of folks are walking on pins and needles.

Gary Smith made over $1.1 million in cash compensation last year.

Why???
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