Ciena readies for Nortel MEN integration

NOVEMBER 24, 2009 By Stephen Hardy -- Ciena has committed $749 million to acquire most of the optical and Ethernet assets of Nortel’s Metro Ethernet Networks (MEN) unit (see "Ciena wins Nortel MEN auction" and "Details, reactions emerge on Ciena’s win of Nortel MEN auction"). Now it has to figure out how to leverage its new assets.

Ciena Senior Vice President of Strategic Planning Tom Mock says the MEN integration process is already underway. “Most of our focus to date has been on ensuring continuity of operations,” he explains. “We’ve dedicated a team, and a team is being dedicated on the Nortel side as well. And we’ve also engaged some outside consultants to help us in that.”

But there’s only so far Ciena can go until the transaction closes, which the company expects to happen during the first quarter of next year. “Some of the functions, just because we remain competitors until the final deal is signed, we won’t be able to get complete access to,” he admits.

The company also has plans in place to hire at least 2000 current Nortel MEN employees. “Basically, we’re looking for the best talent, as you might imagine,” Mock says of how Ciena will choose whom to bring along. “And we’d be looking to take people pretty much across all the functions. Now remember, this is a carve out, so a lot of back office functions are not include in this deal. So most of the employees would be in R&D, services, sales and marketing, and operations.”

Job offers should go out during the 30 days after the acquisition receives bankruptcy court approval. A hearing that should lead to this approval is set for December 2.

As for deciding how to integrate the new MEN assets, “That’s something that we’re beginning to work on now,” Mock says. Despite overlap in some product areas, Mock emphasizes where the new acquisition will prove complementary.

“At the end of the day, we actually were investing our R&D kind of in different areas,” Mock asserts. “Nortel was doing theirs more in the long-haul transport and high-speed over long haul kind of areas, and we were typically doing it more in the metro area and the switching parts of the network.”

Along those lines, Mock foresees Nortel’s technology will augment Ciena’s existing IP/optical convergence strategy. The company announced its original stalking horse bid for Nortel’s MEN shortly after unveiling an upgraded CoreDirector FS platform as well as its 5400 Reconfigurable Switching Systems (see “Ciena releases CoreDirector FS for evolving networks to Ethernet and OTN” and “Ciena intros modular approach to IP/optical networks”). At the time, Ciena asserted the two initiatives enabled the company to address optically based packet transport seamlessly, using the same operating system, from the metro all the way through the core.

Mock sees Nortel’s strengths as fitting into that vision well. “The biggest strength right now is their high-capacity long-distance optical transport, their 40G and ultimately 100G transport over longer distances. They have the capability to operate over all types of fiber, over essentially over 10G-class distances,” he says. “And there’s also some intellectual property on the Carrier Ethernet side.

“And let’s not forget that they have a pretty strong customer base worldwide that was also attractive to us, both in terms of geography and also in terms of additional key accounts,” he concludes.