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Optical/IP

Ciena Taps Market for $1.5B

Less than two weeks after filing for a secondary offering, Ciena Corp. (Nasdaq: CIEN) today completed the sale of 11 million shares of stock and $600 million in bonds (see Ciena Completes Secondary Offering).

The shares were priced at $83.50, bringing the total amount of capital raised to $1.52 billion. This is more than the $1 billion that was originally planned (see Ciena Tests Capital Markets).

The deal answers the question of whether the capital markets are ready to open up to quality names in the optical sector. Rick Schafer, analyst at CIBC World Markets, says, “Despite the space being beat up lately, this shows that good deals will get done in this market. The window was open a crack, and now this opens it up even more for other deals in the pipe.”

The deals that he is referring to might be the upcoming Tellium Inc. IPO and the recently announced IPO by Riverstone Networks (see Riverstone Readies Its IPO ).

The bonds were offered as convertible notes with a 3.75 percent yield, exercizeable at $104.38. This means if Ciena’s stock price reaches above $104.38 then the bonds can be converted into stock but the bond-holder locks in the $104.38 price.

The offerings were underwritten by Goldman Sachs & Co. (NYSE: GS), Morgan Stanley Dean Witter, Banc of America Securities LLC, and Robertson Stephens.

-- Matt Malina, research associate, Light Reading http://www.lightreading.com

Scott Raynovich 12/4/2012 | 8:56:38 PM
re: Ciena Taps Market for $1.5B Does this mean the market is ready for IPOs? If so, who do you think will be first in the networking space?
mike38 12/4/2012 | 8:56:37 PM
re: Ciena Taps Market for $1.5B i agree ...

also, the lag time that these companies had to go through without raising the much needed cash from their ipo, has probably crippled them ..

i.e. Tellium, Zaffire ....

time will tell
mike38 12/4/2012 | 8:56:37 PM
re: Ciena Taps Market for $1.5B is 1st in the running ....
opticalwatcher 12/4/2012 | 8:56:34 PM
re: Ciena Taps Market for $1.5B Hmmm....not sure I agree that the company is suspect. Reasons: (just my 2cent perspective)
- Tellium has a switch in Extant network (live) that works.
- Tellium has more than just one person running the show (i.e., much talent on their list of engineers). No one significant has quit.
- Tellium rounded up clients, two that invested in the company and one that didn't (C&W), prior to initiating the process of going IPO. That holds more weight in my book than say corvis or sycamore who went public without significant revenue.
Also, the reference to electric core is a moot point since that is the norm for todays delivered products. Yes, future is all optical, but todays real world is OEO. See below:

Optical Switches

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Also known as: optical cross connects, wavelength routers

Description

Devices that sit at junction points in optical backbones and enable carriers to string together wavelengths to provide end-to-end connections.

Key issues

Number of ports. The widespread deployment of DWDM (dense wave division multiplexing) means that carriers now look for devices that can scale to more than 1,000 ports. Note the word "scale". Carriers want modular solutions, so they can increase capacity as and when they need it.

Automation. Carriers want to provision strings of wavelengths from a remote console, in minutes. They're also looking for fast automatic re-routing of wavelengths around failures.

Granularity. Carriers want the switch to handle small as well as large bandwidths, so they can eliminate multiplexers.

Players
This is a market in the making. Right now, nobody has a commercial product and different vendors are tackling carrier requirements from different directions. One group is developing switches with electrical cores and is placing a heavy emphasis on net management. Another group is developing switches with optical cores, a technology that's in its infancy (see Optical Switching Fabric).

Some of the switches with electrical cores are being designed so that optical cores can be added at a later date.

Vendors developing optical switches with electrical cores:

- Brightlink Networks Inc (until recently called Corvia http://www.brightlink.com
- Ciena Corp,http://www.ciena.com (via its acquisition of Lightera)
- Cisco Systems Inc. http://www.cisco.com (via its acquisition of Monterey)
- Nortel Networks http://www.nortelmetworks.com
- Tellium, Inc. http://www.tellium.com
- Sycamore Networks http://www.sycamorenet.com

raaid 12/4/2012 | 8:56:29 PM
re: Ciena Taps Market for $1.5B what about OMM?
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