- The Washington Times - Tuesday, February 19, 2002

Ciena Corp. said yesterday it will acquire a California competitor for $1.2 billion in stock and debt, a transaction that combines two companies struggling to make sales in a sluggish telecommunications-equipment market.
Ciena, a Linthicum, Md., firm that is the nation's second-largest producer of fiber-optic networking equipment, will buy ONI Systems Corp., a smaller company, to boost sales of optical networking devices used in metropolitan telephone networks.
Ciena will give ONI $900 million in stock and take over $300 million in assumed debt. ONI shareholders will get .71 shares of Ciena stock for each share they hold in the San Jose, Calif., company. ONI shareholders will own about 24 percent of Ciena.
Both companies have struggled because of falling demand for equipment as telecommunications firms cut spending.
"It was quite a party in 1999 and 2000. Now there's quite a hangover," Ciena President and Chief Executive Gary Smith said in an interview.
ONI laid off about 120 people in October and has 700 workers now. ONI closed Friday at $5.54 a share, down almost 88 percent from its close a year ago of $45 a share. The markets were closed yesterday.
Ciena closed Friday on the Nasdaq Stock Market at $8.73 a share, down 90 percent from its closing price a year ago of $89 a share.
Ciena said Feb. 5 it will post a wider-than-expected first-quarter loss. It said revenue would reach an estimated $160 million for the quarter ended Jan. 31, short of the $220 million to $257 million in revenue the company had expected. The company also said two weeks ago it would lay off about 400 workers, or 12 percent of its work force, and close a research office in Marlborough, Mass.
Ciena lost $1.8 billion in its fiscal fourth quarter. About $1.72 billion of that was due to the company's $2.6 billion purchase in March of Cyras Systems Inc.
ONI lost $34.7 million in the fourth quarter on revenue of $42.2 million.
ONI's difficulties led Chief Executive Hugh Martin and Chief Operating Officer Rusty Cumpston to cut their salaries for this year to $1. But Mr. Martin doesn't plan to stay with Ciena, whose purchase of ONI is expected to be completed by the third quarter. Shareholders of the companies must approve the transaction. Each company's board of directors approved the deal.
They began working on the deal after Mr. Martin suggested to Ciena Chairman Patrick Nettles in November that the two firms join. Mr. Martin met with Mr. Smith last month to work out the terms of the deal.
Ciena competes with Lucent Technologies Inc. and Nortel Networks Corp. in the market for fiber-optic networks


Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide