Ciena Taking Home a MEN

An excellent deal. Ciena is a very disciplined and well run company that has handled bubble bust better than many companies in the sector. Nortel MEN was 3rd in the world in optical and years ahead of the competition in 40G and 100G. The combo makes Ciena #1 in optical networking in North America (where the margins are and there was no leader) and 3rd in the world. Due diligence will eliminate any overlap, which doesn't appear to be significant. So, you can buy from the Chinese, the absolute mess Alcatel-Lucent, or the only company in the world that is focused only on optical networking.

Finally! A Market focused guy! Thanks Teleguy for the reasonable analisys. Most of the guys here only see bad things about any buyer.
I'd like to add to your comment, something that made Ciena the winner. She needs and wants the technology, not only the footprint. Moreover, Ciena has recognized the talent of MEN R&D, and is taking most of them. No one else was iterested in taking the technology, only the footprint. It explains why just a few bidders showed up. The stalking horse conditions included people.
Only the people who have already stepped into Carling and Montreal facilities knows the valued people we have there. I'm not from any of these facilities, but I assure you they are the most talented people in optical R&D in world.

>> No one else was iterested in taking the technology, only the footprint.
No one else is so blind-eyed to market as Nortel.

>> It explains why just a few bidders showed up.
thus it explains why just Nortel is in bankrupt now

True, ONLY if Ciena is willing to remove 80% of senior level managers

Insiders are saying MEN management are informing them

- We selected Ciena, they were the best partner for us
- Nothing changes
- Business as usual
- All programs and plans continue unchanged as usual
- Continue working hard, focus on our customers

Sound like they expect nothing to change

hey happy you are more sad. ok to message people to keep things rolling. up to ciena to change things if they want to. why would they rock their own boat. have you not gone about your own business as usual until now.

Ciena + MEN = CIEMEN when picked up cheap later they will rebrand to Nokia SIEMENS

The bullls are talking:

Ciena's Move Is a Winner

By Jim Cramer

It's time to get aggressive on Ciena . This deal, where they will become an optical giant, was a great one for the company and will be very accretive for next year. Yes, they had to pay more than I would have liked. Yes, they had to issue a high-priced convertible to Nortel, which I also didn't like. But Ciena was doing outstandingly well in a difficult environment where the major telco companies cut back. They can't afford to do so again in 2010, and my thinking is that Ciena now becomes a one-stop shop for optical needs. Ciena will now be in the sweet spot to deliver equipment for high-def mobile and fast mobile Internet. The idea that somehow this deal is a setback for Ciena is ridiculous given the growth of the Mobile Internet Tsunami. It is always difficult to say, "This market is dead wrong..."

Ciena (CIEN Quote) target boosted at Citigroup. Shares of CIEN now seen reaching $18.50. Still believe the Nortel deal makes strategic sense. Buy rating.

Personally I'd much rather have FO running my data than wireless, so Ciena needs to get tough and oust some of the human Nortel deadwood at the top, but I'll already bet each and every axe would cost Ciena a handsome bunch.

yawn. everybody else with their terabit routers in access and metro are at the beach.

Jim Cramer. if one thing everybody agrees on is do the exact opposite of what he says. when he is bullish sell and when he is cranky buy. The Jim Cramer Phenom is as good as any other tool to predict how a stock performs.

interestingly Smith and Tom talk about MEN being long haul in their reelases. do they know what they got here?

Whats the saying: Money talks, uh, bulls talk. Um, bull, I guess. I dunno. Something like that.

Nortel's crown jewel sold for the least amount of money of any of its divisions,
plus it had to be cash and options deal, all the other divisions were sold for
cash only at double the money. Once again shows how bad Nortel management was, they never know what was a jewel and what was fluff.

Merging two entities on crutches won't make a sprinter out of the new outfit...

As for leaving the MEN exec team in place, agreed that there will be a power struggle but hopefully someone will realize that P. Morin's team systematically took the wrong decisions in the last 5 years (abandonning the metro space, betting the farm and loosing badly on a god-box for Vz, OM3500 and OM5000 underfunding, Metro-Next, etc) and that the only thing saving their behind is the skunk work done by R&D for 40G and 100G.

This doen't mean Ciena's management team is better... like I said CieNo is not out of the woods yet.

This move will push ciena to the cliff in terms of assets. However, I think it will give Ciena access to customers they never had before. In terms of Channels, Nortel Sales outside NA was in bad shape anyway, so Ciena is gaining very little outside NA.

The big issue I see is how to combine the management team. Morin and his team know how to play the politics and they will eliminate Ciena management in no time. Morin already did it when he took over Metro and will do it again.

If the existing Nortel Management continue such as Morin, Scott, Shauna, Mike, and the tens of JCI6 and Directors who do nothing other than reporting fake numbers or useless projects, Ciena will be in trouble in very short period. These people proven themselves to be very poor business people. Period. Ciena will live without them.

If the integration period takes long, Huawei, ZTE, Cisco and ALU will gain new market share.

never heard of the last two so cannot be that important. sounds like the Dark side taking over. men was 4th place and ciena was 10th so an ego clash will definitely happen. ciena management looks weak so there is no way they can prune the bad and groom the good.

Huawei is already no 1 in optical followed by Alcatel. Cisco is nowhere in optical except for some clunker they bought years ago. with 30 billion provided by the Chinese to Huawei they are geared for total annihlation.

You girls are missing the bigger picture.
Ciena is american owned and based near the nations capital.
This merger will open up much more opportunity and success than Nortel
already have in North America.
America don't want huaweii anywhere near the big players in america
especially business, commerce and national security.
Same for alcatel.

What a joke, the jewel in Nortels crown worth 500mill plus a few sheets of paper.

CVAS is next and with offices closing around the world , including Asia, where apparently cvas does well , one has to wonder how much it will fetch.

i read somewhere Ciena was downgraded to "perform" from "outperform" post-acquisition so it was not dead MEN walking from the start, so to speak.
I'd actually, in all seriousness, like to work at Ciena and watch how things go there over the next few months, just for fun.

Lights out edict, yes? no? Cisco stuff in the trash?

yep...CIEN

At least they took 2,000 people. Lets hope they are good people =)

Nice article by Tom Mock.

"is set to roughly double in size – both in revenue and headcount"
but what about expense though...and why all this talk about sales/revenue only again and nothing mentioned about earnings/profit

"attributable to two things: the overall economy and their customers being a bit more cautious"
who says this is why 3rd quarter tanked, Nortel? Cautious is an understatement. They have been cautious and remain so until proven otherwise when it comes to Nortel, hence the contagious challenge resufaces in metamessage.

and yet again the word "focus" comes into play in the hype...hysterical...hype sounds like Nortel reincarnate, wait, it is!

"These assets fit well with our company, and we probably can get more leverage from them than pretty much anybody else could."
refreshing to read something that makes sense here, ok, but Noika wanted them too and why are they of a lesser fit?

"There wasn’t as much overlap between our product lines and customer base"
"not much" doesn't mean none....a point better left mute...phhht

Honest of them to admit wanting their "customer base" (like everyone else who bought this garbage sale to expand but on what) and I have already reiterated where it is headed with differing opinions than those expressed by Nortell's here, oops I mean CIEN's PR =)

"accelerates our strategy by two to three years in terms of technology, customer base and coverage across a variety of different markets. In that regard, this is giving us a fair amount of additional fuel in the tank."
again, bravo for a nice PR here again...ok...lotsa R&D and sales that CIEN can profit from by, you got it, cost cuts, the overlap remember... =) dejas vous

"On other bidders: The only one that we were bidding against in this process was Nokia Siemens."
you mean those buggers cost them 40%! heh... free enterprise huh =) Does more harm than good sometimes, don't it? =)

good luck, Owens was right in that this was to become merging and merged sector but wrong about Nortel being the acquirer than acquiree let alone under these disgraced circumstances =)

from LR

"Remake" is putting it mildly. Ciena will likely double in employees, to nearly 4,000. Its revenues could triple. (Ciena's revenues for the last three reported quarters totaled $476 million, versus $988 million for Nortel's MEN.) It's the biggest acquisition in the company's history. Not surprisingly, many analysts have taken a skeptical view of this matchup all along.
---
if MEN is 2 times Ciena revenue watch for a huge internal battle to take control. this will happen at all levels which will be bad for the company.

He who pays the piper calls the tune... any battles will be very one sided. Ciena will listen, but they'll also be looking at the books and how the place was run.
e.g: Nortel MEN had massive problems with dreadful forecasting and product development methods, that constantly resulted in their having to "manage" tens of millions of $$ in dead inventory.
In comparison... whatever their faults, Ciena generally makes profits - even if a small one:-)

I think the MEN management thinking will be "YOU WILL DO IT THE MEN WAY" and the fight for power within will prevent a sucessful merger, look at Nortel's PR statement today "Nortel selected Ciena", didn't Ciena buy MEN you can already see the writing on the wall, who owns who, this isn't going to be marriage, it's going to be like a divorcing couple forced together (to be a fly on the wall and watch the fun).

more like two gays who want to be the man

The Nortel management team has had eight years of tough times to hone their survival skills. Ciena doesn't stand a chance.

Phil Morin is already planning to double R&D on some dubious projects and will be presenting this to the board on Monday. Meanwhile, he is going ahead without approval and making customer commitments.

yikes. customer commitments is bad. these guys are barracudas so a lot of the ciena VPs (incl ex nortel from years ago) are possibly out of a job. will Morin do a Daichendt without the god told me part.

Holy crow! Ciena's competitors must still be dancing in their boardrooms. I'm trying to remember Ciena's last big acquisition -- I think it was that POS Catena, an attempt to get into broadband / DSL. Their stock still hasn't recovered from the pummeling it took when the hoped for benefits of this vastly over rated acquisition didn't pan out (surprise), proof that Ciena has no ability to do due diligence. They're done for.

wrong. last acquisition was worldwide packets.

right that their due diligence is bad. they paid 200 million for worldwide that made 20 million revenue.

right that benefits were over rated.

half right they are done for.

Poor Ciena…. They don't know what they are buying…

A bunch of over paid directors, ex -director, managers, ex-managers..
A lot of people that has been surviving because they protect each other, because all are friends…
They killed Nortel and they will kill Ciena too.

How long is going to survive??? I give them 1 year to be in CH11 too.

That is totally unfair. Metro has huge money making potential and to call everyone who are still working there,friends, you are sounding like a guy who is bitter (Because he was let go?)

But Metro doesn't turn a profit, no margins, so what if it brings in revenue it doesn't cover the costs.

I guess that's why they paid 700 mill plus and basically agreed to keep all the employees right, because it has no potential or future and does not turn a profit.

500 Mill plus some pieces of paper (paper will be worthless in a few years), stalking horse conditions were you must retain 85% of the MEN employees worldwide and 100% of the Ottawa base employees, keep Lab 10 & 2 for 10 years, the Montreal NPI team for 5 years, recognized years of service and pay, etc, Ciena didn't have a choice when bidding. Ciena is facing a more competitive market, lower cost competitor products, shrinking market share, etc they will have to be extremely cost effective and competitive they will have big challenge and battle in trying to bring MEN inline with todays reality

Whatever the case may be the employees have definitely found themselves in a far better situation that they were in a day before the auction. So what's left. GSM and CVAS. That's it That's all. After that just business services.

Haha! I have a complaint. I went to Cienas website to look for job opportunities and hit a dead end:

Love What You Do
Build your network with Ciena
Apply Now

https://recruiting.ciena.com/

they hired so many ex nortel folks. as if they were fallback in case tehy did not get the nortel assets. would hope they still keep them.

Shares of Ciena is down 8.5%. Not so bad if you consider the uncertainty that comes with buying a business as big as yours. Also the $239 millions notes convertible somehow dilutes existing shareholders equity, I would think.

On the other end, Nortel bonds still trading over 60 cents on the dollar. So everything is fine, let's pass on to the next item : CVAS or GSM ? NS is due for a grab.

It's really interesting the phenomenum we see at this site:
There are several comment posters that act as hurt ladies, when writing their comments. Nothing is good enough to them. If there is no buyer they complain, if there are some, they are not smart enough etc, etc...
It's a circus! I really would like to see those very smart people running any business.
It doesn't mean I agree with Nortel mismanagement, but I would like to see a happy end to the employees. I'm sure most of these (black cloud) posters are part of the disaster, and are unhappy because were laid off before bring more damage to the company.

Okay, then. "I Believe Nortel will set Ciena straight" Much like "I Believe no Chapter 11 filing is imminent"

There are some good discussions ... but otherwise isn't something one can be proud of.

NTlegacy, just look a few inches up for a positive comment ....and you are right, for a change ;-)

Nokia Siemens is a sore loser. They do not bid to WIN, they bid to lose. This company is a JOKE.

change the titel to allaboutnokiasiemens

I think the two auctions have actually damaged them. the industry will see this as a weakness and competitors are sure to exploit it creating more uncertainity around NSN. looks like a half hearted bidding process for NSN unsure of themselves as a company as to which direction they want to go in.

I would not be surprised if the N and S in NSN pull out of the joint venture. it has not done much anyways.

Why do NSN bother to bid? What did they expect? No one else will bid and they will win it all without any competition? With this mindset, Good luck winning any contract anywhere.

Is it possible that NSN bid because they wanted to WEAKEN their competitors, i.e. Ciena?

THey drove the price up as high as they could, knowing that if Ciena won it would leave them weakened financially.

NSN had to be sure that Ciena woudln't just pay peanuts for this.

Any update on the timing of the GSM auction?

NSN for GSM?

Poor Nortellians, Hackney is probably going around doling out high fives - whether they like it or not.

Think about it for a sec, Joel watching investors over at Wall St. just cutting off funds, pinching faces off pennies, doing as they please with CIEN stock

jk! Please don't nobody hit me.

Short CIEN. This is just the beginning! They have paid big $ for a financial black hole. A license to lose money indefinitely, The bad news will dribble out over successive quarters as they figure out that they have bought a monster they can't control.

A MEN
B CIEN U
C H11
D ND
.
.
R IP
.
.
signed
Z MAN

Expect Ciena stocks to drop like a rock, and for Ciena to fill for bankruptcy in a few short years

We will be back at this 2 years from now.....this time Ciena will be in bankruptcy protection

could be or they will be acquired cheap. with two more lcoations they have too much operating costs not to mention the number of executives now, who are going to difficult to deal with when restructuring. if they had only got the products and engineering it would still have been a good deal. now they will completely lose focus with a 50% overlap.

Ciena shoud give packages to MEN's executives, upper and senior managment, keep the engineering staff and products - restructing will then be successful

yup agreed but then it is another 30 to 50 million in payouts. dont think they will as the realization will soon be to conserve cash. they could have chosen not to take them on board making them look foolish if they do let them go.

Ciena is now down by 8.5% today. Wall St does not like it. NSN could easily have taken this away. Imagine they did not see positive cash from the deal.

Integration is going to be a major issue that companies like Huawei are going t otake advantage of.

MEN been a black hole for years, dumping money into the black hole, doing their own thing, with no profit, in a shrinking market with more competiton, can't see it be a good deal for anyone

Looks like a good deal for the employees.

Short Ciena!

lol - you don't select Nortel, Nortel selects you!

http://money.cnn.com/news/newsfeeds/articles/marketwire/0561953.htm

Nortel Selects Ciena as Successful Bidder for Optical Networking and Carrier Ethernet Businesses

The market opens in one hour. I hope CIEN stock doesn't select me to buy it, short or long.
NT went From $1,231 to $.005 - CIEN would have to appreciate a whole lot to allow NT exes to recover any meaningful amount of lost severance via CIEN stock purchases.

yes the arrogance is deeply entrenched in the thick skin.

Yep that Nortel MEN, we selected you, ignoring the fact they are bankrupt
next they will be telling Ciena you don't know anything about the optical business that is why we selected you, this is how to run the optical business follow our lead into bancruptcy.

sounds like a covert takeover of Ciena to me.

"Walk toward the light"

I expect that the Nortel ELT involved in this has already found a way to take care of themselves.

Nortel today announced it has concluded a successful auction of substantially all of its global Optical Networking and Carrier Ethernet businesses, with Ciena emerging as the winning bidder. Ciena agreed to pay US$530 million in cash plus US$239 million principal amount of convertible notes due June 2017. The agreement also includes job offers for a minimum of 2,000 Nortel employees.

The Multiservice Switch (MSS) organization, which is not part of today's news, will continue to report to Philippe Morin until the close of the Optical/CE sale. Pat Walsh will continue to lead the MSS business both before and after the sale, and will be responsible for maximizing this strategic asset.

The sale is subject to court approvals in the U.S., Canada, France and Israel as well as certain regulatory approvals, other customary closing conditions and certain post-closing purchase price adjustments. U.S. and Canadian court approvals of the sale will be sought at a joint hearing on December 2, 2009. In some EMEA jurisdictions this transaction is subject to information and consultation with employee representatives and/or employees. The sale close is expected in the first quarter of 2010, subject to the timing of obtaining other regulatory approvals.

These auction results are reflective of the value of the Optical Networking and Carrier Ethernet businesses, and I want to thank the entire MEN team for continuing to build that value and remaining committed throughout the process.

Learn more about this latest development by reading the press release and visiting the Path Forward microsite, where you'll find the latest information. If you have questions not addressed in these materials, check with your manager.

Pavi Binning
EVP, CFO and Chief Restructuring Officer

MSS is dead. They do not even sell much now. what is so damn strategic about it? If memory serves me right, was Walsh not the guy when MPE happened. Must be smoking crack if they think it is a leading business. But that was Nortel. No reality checks.

Scott McFeeley was the guy in charge of MPE. Pat Walsh was always involved in running the Passport business, which was mostly always pretty well run compared to most other Nortel businesses.

MSS is just mostly servicing the installed Passport base now, isn't it?Somebody will buy it for that installed base and the customers.

most customers are leaving for Alcatel, Cisco.

ALU is one of the biggest customers for MSS..it is far from dead

for what buying everything at cost. are you nuts.

Just stating the facts! PP has one of the best profit margins.Granted thats not hard when you compare to the other products!!..but its far from being dead in the water.Which will be clear Q4 results now they are not part of MEN

You really are living in the past. MSS has dried up big time worldwide. People are moving away from ATM. I would guess MSS makes about 50 million per quarter if I was to bet.

Shoot, I cant remember the 2008 count -- Richardsons Global Center Of Excellence must've numbered at least 800 Passports. Without em you could vacate another lab or two.

Because someones opinions differ from urs they are nuts? Hardly! I am simply stating that MSS is not just all about servicing. There is still a considerable customer base buying it...and moreover it makes a profit

no point arguiing actually. you are in a time capsule that was ejected 10 years ago. no future likely for you so maybe this is the best gig you have for now.

why dont you post some hard data from an analyst. surely that will tell waht a good story this is if true. betcha you will not and hide behind some silli excuse.

Scott Mc UnFeeling...worst manager/leader around...I'd pay NOT to take him on to my company!

how much would you pay. what he makes, 2 times, 3 times

Touchy touchy are we?!


Okay, Mc Touchy.

"The agreement also includes job offers for a minimum of 2,000 Nortel employees."

How many MEN employees currently Nortel has? Is this good news or bad news for MEN employees? And yet again, what about CVAS? Can we say its now CVAS' s turn? have a good day everyone...

Most of the CVAS's operations are run by Netas,and there are plenty of local bidders to acquire Netas.However I can't see any potential bidders for CVAS biz among the rivals such as ALU,Ericsson,ZTE,Huawei,NSN.Do anyone have any info or idea?

i remember seeing Finnish & Swedish & German guys with expensive suits on Netas just a couple weeks ago. Why don't you think they would bid also?

I don't think Ericsson will spend more money after they spent 1.13 billion for CDMA/LTE biz.Huawei and ZTE already published press releases saying they don't have any intention to acquire any of the Nortel businesses.ALU and NSN's pockets are depleted,ALU already have a successful affiliate in Turkey.Only possible bidder seems to be NSN,however all of the carriers in Turkey have recently signed long-term contracts with other vendors.(Turkcell with ALU,Avea with Ericsson,ZTE and Huawei and Vodafone with Huawei) So I don't think they would bid.But this is just my comment,tomorrow Nortel would declare a stalking horse bid with NSN for CVAS :)

Netas is NOT under bankrupcy protection. All the IPR is owned by Nortel which is under bankrupcy!!! Does it ring any bells?

Nobody said so...Netas is financially strong however its future will be in doubt until the acquirer of the Nortel's shares is revealed.

sorry, it doesn't. any clues?