Ciena

Market position

Ciena was described as the second largest fiber optic networking equipment producer in the United States in 2001 and the fourth largest by 2003, and as a leading maker of advanced optical networking components for telecommunications in the early 2000s. It ranked 770 on the Fortune 1000 in 2017, 744 in 2018 and 699 in 2024. Publicly listed peers referenced alongside it include Lumentum, Coherent, Corning, Cisco and Nokia.

Ciena's early advantage was a head start in dense wave division multiplexing: its MultiWave 1600 carried 16 discrete optical channels over a single fiber pair at a time when time division multiplexing allowed two, and competing WDM entrants such as Pirelli offered four channels. The system let carriers increase capacity from 2.5 Gbps to 40 Gbps at substantially lower cost than laying new fiber and required fewer amplifiers between sites. Because the technology was novel, the company manufactured its own optical filtering devices rather than subcontracting. More recently the company combines networking hardware with the Blue Planet automation and Navigator network control software portfolios.

Technology

The company's core technology is dense wave division multiplexing, which uses very short laser pulses and a prism-based separation of light into distinct frequencies so that multiple signals travel simultaneously over the same fiber, amplified optically rather than through electrical regenerators. Current products include packet-optical transport platforms, reconfigurable line systems, coherent pluggable transceivers and coherent routing platforms, paired with the Navigator network control suite and Blue Planet software for inventory management, orchestration, route optimization and unified assurance and analytics.

Go-to-market

Ciena sells directly to large carriers and network operators, historically winning trials and multi-year supply agreements with major U.S. and international carriers, and has used regional partners such as Nissho Electronics to market its technology in Japan. It also expanded from long-distance carriers to regional Bell operating companies and European operators, and complements product sales with subscription software, consulting, installation, maintenance and training services.

Telecommunications carriers, service providers and other network operators. Named customers have included AT&T, Deutsche Telekom, KT Corporation, Verizon, Sprint, WorldCom, Bell Atlantic, Digital Teleport, Cable and Wireless Communications, Japan Telecom, China Telecom, Telmex, Teleway Japan, Norfolk Southern, CenturyLink and Windstream.

Geography

Ciena is headquartered in Hanover, Maryland, and serves network operators in the Americas, Europe, the Middle East, Africa, the Asia Pacific, Japan and India. It has research and development operations in Ottawa, where the budget was approximately $180 million per year as of 2015, and earlier established an R&D team in Alpharetta, Georgia. Around 2009 roughly two-thirds of revenue was generated in the United States.

History

David Huber, a manager of General Instrument's optical technology research lab, licensed the company's abandoned wave-division multiplexing technology and registered the business in November 1992; it was initially named HydraLite. Optelecom, Huber's former employer, provided management assistance and production facilities, and co-founder Kevin Kimberlin supplied initial equity capital. Sevin Rosen's Jon Bayless invested after seeing a demonstration in 1993, hired Pat Nettles as CEO in February 1994, and the company was renamed Ciena that year, operating first from Dallas before moving to Maryland. The first product shipped to Sprint in May 1996, and first-year sales of $195 million were reported as the highest ever recorded by a startup at the time. Ciena went public in February 1997; a proposed $7.1 billion merger with Tellabs was announced in June 1998 and called off that September. During the telecom crash, annual sales fell from $1.6 billion to roughly $300 million; Gary Smith replaced Nettles as CEO in 2001 and Nettles became executive chairman. The company raised $1.52 billion in 2001 and used its cash to fund acquisitions, buying 11 companies between 1997 and early 2004 and spending more than $2 billion on five networking technology companies from 2001 to 2004. Ciena recorded net losses until 2015, when it earned $2.4 billion in sales and a $12 million profit, and revenue subsequently grew past $3 billion in 2018 and beyond $4 billion by 2024.

Risks & controversies

The proposed $7.1 billion sale to Tellabs announced in June 1998 was called off in September 1998, with financial performance and shareholder disapproval cited in the media. During the telecom crash annual sales fell from $1.6 billion to roughly $300 million, and the company reported a $1.59 billion loss on $361.1 million of sales in 2002 and a $580 million loss in 2009, recording net losses until 2015. Early revenue was highly concentrated: Sprint and WorldCom accounted for 97 percent of revenue as of early 1997, and about 40 percent of business came from AT&T and Sprint in the early 2000s. In 2010 the company was the subject of press speculation about potential acquirers.