Ciena to Buy NT’s Optical/Ethernet Assets

By Mark Evans | Published: October 7, 2009

Picture 2In a move that was prematurely announced last week, Ciena has made a “stalking horse” bid for most of Nortel’s optical and Ethernet assets. The offer is worth $521-million – $390 million in cash and 10 million common shares.

Ciena disclosed the deal last Friday in a press release on its Web site. The press release was quickly taken down, and replaced by another press release that Ciena was in deep discussions with Nortel but a deal was contingent on a competitive bidding process.

Ciena said it will keep 2,000 of Nortel’s employees. The assets to be acquired had about $1.36 billion in revenue last year, and $556 million during the first six months of 2009.

In a statement, Ciena CEO Gary Smith said:

“This is a unique and exciting opportunity for us to accelerate our existing strategy and the pace of our growth plans by two to three years. We believe this transaction will position us for faster growth by giving us greater geographic reach, broader customer relationships and a deeper portfolio of solutions. We believe we are best positioned to leverage these assets, thereby creating a significant challenger to traditional network vendors.”

For more, see the Wall St. Journal.

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  • marknit

    Why is everyone talking as if it's a done deal?

    Ciena did not purchase MEN. They are bidding the first bid in a stalking horse process. It's obvious the final amount will not be 500 million $ and Ciena cannot provide more then that.

  • TongueInCheek

    Why is everyone talking as if it's a done deal?

    It makes for a good headline even though it isn't technically accurate.

    Don't be surprised if Ciena makes a pitch to the EDC for some funding to preserve Canadian jobs, especially in the Montreal area to help boost it's cash reserves for the deal.

    I also won't be surprised to see Cisco enter the auction as they have been notoriously weak in the Service Provider Optical market.

  • Teleguy

    I hope they are debt financed to take it to the limit, which will certainly be more than $521 million.

  • marknit

    How much do you expect MEN to go for? I couldn't imagine it going under 800millions.

    Would the EDC finance up to 400 millions?

    I wonder if the “we will keep 2000 jobs” statement will affect gov/EDC funding.

  • Lookahead

    It seems not everyone realized that Ciena is not bidding for entire Nortel MEM, what Ciena not bidding, or Nortel not put on the table is MSS (a.k.a Passport), including all R&D, support, and sales related to the MSS.

    Then after MEM is sold, Nortel still have CVAS, GSM, MSS, LG JV-shares, patents including LTE for sale.

  • bankrupt_bob

    “First you say you do and then you don't,
    And then you say you will and then you won't,
    You're undecided now, so what are you gonna do?”

    (–with apologies to Ella Fitzgerald)

  • GoProto

    Why does this post say that Ciena “is acquiring” …” most of Nortel’s optical and Ethernet assets for $521-million – $390 million in cash and 10 million common shares.”
    ————————————————-
    Misleading, to say the least. What's the purpose behind the flagrant spin??

  • TongueInCheek

    Are you trying to suggest that Nortel is somehow responsible for Mark Evans' choice to embellish the headline?

  • Jimbo976

    It's kind of comical that this would be the 1st time to complain about “misleading” information related to Nortel on AAN.

  • GoProto

    “I also won't be surprised to see Cisco enter the auction as they have been notoriously weak in the Service Provider Optical market.”
    ——————————————————–
    I could be wrong, but my gut tells me in Capital Letters that Cisco DOES NOT want a single piece of Nortel, be it big or small. Not because of Nortel people(other than Management/Execs/BoD) or Tech. and Products, but because of the disgraceful way the dissolution and outright liquidation of a once great company went down, which several specific people are 100% responsible for, including the one who already jumped ship. Nortel didn't fail because of lack of know-how and tech, it was all because of management and their deceitful and willfully stubborn decisions. Who would want to deal with Nortel regarding any sales transactions, that requires transparency and integrity, two things glaringly missing from the NT high ranks? Have they proven themselves to be trust-worthy? Indeed not. I think even Avaya took long hot showers after the auction went down but kept their eye on the brass ring that they imagined. We'll see about that. But Cisco? I highly doubt it. If i'm wrong, I will be the first to admit it, but I'll be extremely surprised.

  • protosphere

    There is nothing misleading about posting news that changes.
    You seem to find humor in the strangest places no matter what ID you use TongeInCheeks.

    May I suggest that your claiming Nortel brand will survive, No bankruptcy, etc. with selective reasoning over the years is grossly misleading and entertainingly “comical” instead.

    AAN has been dead on with exhaustive substantiation by the contributing posters while the relentless pumpers/cheerleaders/trolls dead wrong all along, consistently, to this day.

  • protosphere

    “I also won't be surprised to see Cisco enter the auction”

    hahaha… now that's fun-n-n-n-n-y!

  • zeroman

    Cisco can buy a lot better stuff for 500 million instead of just a dumb pipe business.

  • TongueInCheek

    The CDMA/LTE and Enterprise businesses were sold around a .7 time annual revenue factor which would lead to a sell price of between $700 Million and $800 Million if this factor remains whole for the MEN business. However, there is an emerging market opportunity which is substantial that could draw increased interest.

    4G Wireless Backhaul is likely to become a huge market over the next 5 years. It is expected that 100s of Wireless Operators are going to deploy LTE over the next 5 years which will substantially increase the bandwidth requirements of the backhaul optical network. Some of this will go directly to Packet-Optical players such as Inferna or Fujitsu, bu there will also be players that have both Wireless and Wireline networks that will want to support all traffic types across a common optical network.

    With this in mind, the likes of Ericsson, Nokia-Siemens and Cisco could easily get in the game if they have their business targets to include this market opportunity.

    I have no idea how much money the EDC would be willing to kick in. It would be very interesting to understand what percentage of the 2,000 retained employees are based in Canada as that could be a key indicator for EDC involvement.

  • zeroman

    they must be super confident that no one else will bid, which maybe the case. unless JDS, Sycamore and others enter. But they are all suffering so tough market to get money.

    MEN is twice that of Ciena so interesting to see who stays and who goes because Ciena is management heavy too. unless the combined company has a higher ratio of VPs to employees. sigh!

  • protosphere

    What $400? Try $300M, and that was for Seimens' initial offering.

    Only one unit had $300M offered by the EDC, CDMA/LTE (less patents). However, Ericsson sought to ask for this same $300M in welfare that Seimens negotiated after they won the bid.

    If they sprung a cool $300M for every rapidly depreciating business unit they sucker others into buying today, the government may as well have bought the whole company as a crown corporation.

    Forget government welfare to sweeten any more deals for this fraud dog. The people would freak and I am surprised they even offered Seimens this much after Nortel already owed the EDC.

    Extending EDC renewals as good news all the way down. As much of a joke as the OSC, who also act contrary to what they precisely there to do. Whether they export jobs, finance foreign orders, pay foreign firms to take this companies, or protect shareholders with zero fines for the largest fraud in Canada, like the hen looking after the chicken coup, reluctant to put their pals in jail, these financing and regulatory bodies act totally contrary to what they are there to specifically do.

    Forget further funding, at least by any stretch of what the people and government would want for this fraud dog terminating and exporting jobs while cutting severances for big business creditors.

    No more money for Nortel. Nortel brand is doomed to vaporize for look how long already burning so many billions.

  • Lookahead

    Lot better? Nortel's PBT has much better cost/effective and performance than Cisco's MPLS. Even muti-points PBT is better than Cisco's. The traditional market share occupied by Cisco does not mean next generation and newer technologies invented by Nortel are not competitive. Nortel's meltdown is all previous Z'm and BoD fault, not mis-led to Nortel's technologies by you.

  • ntpurgatory

    Re: “is acquiring”, I see that there is no announced auction date yet. Perhaps the accidental press release earlier in the week has forced this announcement to come out before they've had a chance to file with the bankruptcy courts and procure an auction date… If so, “is acquiring” is an obvious mistake in wording from the PR people.

  • protosphere

    “sold around a .7 time annual revenue factor “

    what about earnings?
    Interest in losing how many billions over how many years?

    CDMA is dying, optical backbones generate peanuts and why didn't you mention Huawei, as LTE has stronger players in a merging competitive landscape as other telecom companies will be hurting.

  • GoProto

    Nope. I am saying that what happened with the press release in the first place, then the removal of such, and now a statement made as if it were a done deal is strange, and, it is probably not just for no reason. I was merely hypothesizing about what reasons could make any sense at all. I don't know who is behind these activities.

  • GoProto

    As you can see above, Mark has chosen to change the wording from “is acquiring” to that they made a Stalking Horse bid. So, scratch my cause for concern. They are two very different things…

  • GoProto

    As you can see above, Mark has chosen to change the wording from “is acquiring” to that they made a Stalking Horse bid. So, scratch my cause for concern. They are two very different things…

  • Jimbo976

    I think you've been drinking too much this morning.

    I have not claimed any of the things in your post above since i've only been posting on here for a couple of months.

    I know you claim you're God because you managed to guess some thinks correctly in the past but most of what you spew on here is pure garbage.

  • Jimbo976

    I think you've been drinking too much this morning.

    I have not claimed any of the things in your post above since i've only been posting on here for a couple of months.

    I know you claim you're God because you managed to guess some thinks correctly in the past but most of what you spew on here is pure garbage.

  • GoProto

    sorry to burst your bubble. I am sure Mark just made a mistake, as he has revised his post. If you don't like this site, than why read or post here??

  • Jimbo976

    I certainly would post a lot more here if it wasn't a 1-sided lynch mob.

  • protosphere

    CIEN stock hit a low of $12.77 since this announcement as their shares traded around $15 only 2 days ago.

    Seems that not only do Nortel's assets depreciate by the day, so do the offers.

    I also thought Nortel sought cash only deals in liquidating so I wonder how they got including CIEN stock approved.

  • GoProto

    Thanks, Mark- for changing the wording. I was a bit concerned, and ~ well confused !! : o }

    GP

  • protosphere

    I do not drink. Beer tastes like bitter ginger-ale and spirits taste like gasoline to me. Heck, even that black juice from hell coffee gives me the heebie jeebies. However, I will take a strawberry shake anyday if you must exploit any weakness. =)

    For someone who claims to post for a couple of months you should be well informed of who maintains credibility here and who does not.

    The terms you exercise are also are strikingly familiar to the pumper(s) unethically leading us astray over the years with personal attacks…I associate the term “spew” with some kind of distasteful projection. It strikes me as rude and gross…

    And what “some” things are “guessed” “correctly” when we provided such exhaustive substantiation to the point of reiterated diatribe, … when we have called this fraud dog dead on swimming against the tide how many times already …so consistently over the years

    May I ask why do you add a few numbers after so many new IDs here now? Do you see al the new IDs with the same relentlessly optimistic message?

    Do you still defy regretting listening to us? Do you, yourself, drink in the mornings. Why do you unethically label us in attack without substantiation. It is rude. =)

  • protosphere

    PBT (optical backbones) earn peanuts, hardly worth a mention.

  • GoProto

    I find it comical that first you say AAN is misleading, than after Mark corrects the post, you say the site is a 1-sided lynch mob, now someone, in your opinion, spews garbage. Hmm. I don't see one name called directed at you. I was not trying to be derogatory when I asked why you are on the site when you obviously find the posts distasteful. I do remember your past posts. It was just a question.

  • normk60

    Ciena is broke. They have $0 cashflow and $1B in debt and they are offering shares which will be worth less if the deal goes through. Also, the final bid will be too rich for their bankers unless they up the number of shares which the creditors will be stuck with anyway. There is no way that Ciena will win MEN. If on the off chance that they do, the debt will drag them down.

  • GoProto

    Yes, I see, a mistake. Mark fixed it. I think I have PTNSD:
    Post Traumatic Nortel Stress Disorder

    After all of the sh*t that has gone down, with NT seemingly able to do whatever it wants across the board, when I see something in writing like that it seems quite possible to me that they could bend or disregard the rules yet again.

    I have to chill..

  • no_sphere

    Why don't you lay off the crap crack? I don't see any intelligent comments from you in any of your posts (and you do seem to have an awful lot of time on your hands…).
    If you think financing=welfare funds, then you should go back to mowing lawns.

  • GoProto

    No surprise there. Whatever they touch seems to shrivel up and wither …

    Who knows about the stock approval? They do whatever they want it seems.
    Judge Gross seems only to be gleeful about the liquidation and the way and when its done can go the hell in a hand-basket. You would think the delay after delay would not be acceptable.

  • rubdab

    Hey, you forgot about 30% savings on energy cost, and 40% less of wasted photons. Also, Nortel's optical not only provides 100G of data transfer but it also can be used as an emergency street illumination.

  • protosphere

    Key concept remains, subject to further bids. aha! can there be more with all cash ofers only please to we'll now take cash and shares? As contradictory as selling all business units by now. No wonder they have kittens when anything is sold in delight.

    If CIEN wins this hard to dump MENs, when will Nortel dilute the 10M in CIEN shares to appease creditors and at what price by then? Average CIEN daily volume on NASDAQ is around 5M, before last 2 days doubling this volume that is from around 15.21 to around 12.77 after announcing this. Street does not like the news albeit bounced to around 13 and a half, hopefully they will be outbid for CIEN's sake, like poor Avaya who holds the bag with Ericsson. Again, what is a money losing business worth? Less than zero?

    Might not take much for them to slip in a full 2days average volume of trading to dump these shares for cash since CIEN is still liquid. Or would they whack the market all at once at creditor's request. These will after all become the creditor's shares, not Nortel's, like their cash, LG proceeds and patents. Did these creditors even have any voice in shares, should be called a stalking baby donkeys in defining what assets mean.

    Confusing stuff, the pressure must be on to dump this stuff, gleeful Gross and all… monitor and remaining board members… and who can Dunn sue for wrongful dismissal with Nortel gone now. Why didn't Manley's firm enter him as part of their creditors or does he need a court judgment first =)

    Maybe this $521M sale can pay for part of the new $3B tax liability the IRS seeks to have judge Gross removed from =) Ah, Nortel, such a chronic and crying disappointment but always.

  • MyHeadHurts

    Ever heard of something called BetaMax? Ever heard of VHS?

    PBT is to BetaMax what MPLS is to VHS. PBT can be technically superior for carriers, but follow the money! You have tonnes and tonnes of network guys being cranked out by colleges and “schools” teaching them Cisco products and how “amazing” MPLS is. Many people will be Cisco “users” even if they dislike how they are treated by Cisco, because they are considered the “standard.”

    It's not MikeZ or the BOD that killed Nortel. Nortel stopped being relevant to the technology economy for “innovation” sometime after 2001. Stock price = respect. Kill investors = Kill your innovation = Kill your business.

    I have some old Transformer cartoons on Betamax tapes I can send you if you want to feel better…

  • agk1

    Then maybe Ciena should change its name to “Nortel”.

  • The psychiatrist

    I think a few of us should go down to Mike Z's home in Chicago and stand out in front of his yard and let it be known what a lying, dishonest and shamerful failed CEO he was for Nortel,of course we won't forget to mention the factt that he made offf with over $30 million for the lousy job he did.

    There is definitely something wrong in this world when these shameless white men in suits make off with millions of dollars in compensation even if they have essentially been total failures for the companies they have and do work for-this in itself should tell everyone that this is not a democratic society.

    Comparing our society to a third world dictatorship doesn't justify the excuse to call North America a democratic society.

  • less

    Mike Z is jobless, wancha ask him to moderate AAN and spew pure wisdoms like “Ciena is levering synergies forward-faced”

  • Teleguy
  • GoProto

    : > }

    Hey less.. how is you ? hope you're not spending your evening “spewing”. Ugh! when i see that word, i think dark green, slimy and …
    ok, time to lose that vision..

  • GoProto

    Ready to go? We can get some “Sandwich Signs”, you know what I mean.. Front and Back-side Boards that say something like you have written, and we can Walk the Line in front of the Former “Recognized leader's” home. maybe we can bring a ship replica, and jump out of it, just like he jumped ship. I can tweet local news organizations and let them know what will be happening.. Maybe others can join us Doc..

  • less

    I'm spending much of my time spewing repaired cell phones back into the populace. A few of them have unfortunately turned out as you've described but I'm gonna keep honing my skills.
    The guy I sit next to is a former NT employee, too, surprise surprise….

  • less

    I wouldn't be surprised to see Six Sigma blow Nortel stock into the stratosphere any moment now, beings how applying it means success is a done deal. I'll come back to lead you but my encore will cost more than 11 mio

    - Mike Z

  • less

    NTSC or PAL? PAL is so beyond vastly superior to NTSC as GSM is to CDMA

  • less

    Will you please finance my CCNA course so I dont have to mow lawns?

  • GoProto

    Yeah, a real shocker, eh? You told me about the cell phone repairs.. argh, I don't know what to say. Is it at least palatable ? Gonna join The Psychiatrist and me on our Field Trip to the Zero Lawn with our sandwiches?

  • MyHeadHurts

    Unfortunately NTSC … Those Betamax tapes of mine are so old I do not know if they will even work in the mechanism any more.

    Agree on the GSM to CDMA comparison. Proof is in the pudding as Bell and Telus just announced the completion of their HSPA+ overlay network in Canada. That means iPhone for all Canadians. Also means the eventual decline of investment in CDMA in Canada …

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