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Ciena offers $900 million for ONI systems

Posted: 21 Feb 2002 ?? ?Print Version ?Bookmark and Share

Keywords:ciena? oni systems? dwdm?

The anticipated consolidation of metropolitan optical equipment suppliers took a big step forward Monday (Feb. 18) when Ciena Corp. made a $900 million bid to acquire ONI Systems Inc.

Ciena, with roots in passive DWDM equipment, has been fleshing out active metropolitan architectures in recent years with its successive acquisitions of LightEra Corp. and Cyras Corp. The ONI bid will give Ciena a full suite of Sonet termination, optical add-drop mux, and hybrid optical switch architectures.

ONI was considered one of the primary success stories among optical startups, winning the same respect in OADM and metro optical switch markets that Sycamore Networks Inc. had won in long-haul switching accounts. But like other market leaders, ONI watched its fortunes dissipate over the last year. The company had quietly instituted layoffs at its headquarters, and chief executive Hugh Martin and chief operating officer Rusty Cumpston had both reduced their salaries to a nominal amount in recent months to help hold down costs.

While Martin will assist Ciena in merging the Ciena and ONI metropolitan transport and switching groups, he is not expected to remain with Ciena in the long term. Cumpston will work with Jesus Leon, Ciena's senior vice president of metropolitan transport and switching, to form a unified product organization for metropolitan products. Rohit Sharma, the chief technology officer of ONI, will serve as senior vice president and CTO of the combined metropolitan group at Ciena.

The transaction, handled as a tax-free reorganization, has been approved by both companies' boards of directors. Ciena will exchange 0.7104 shares of its common stock for each share of ONI stock. The company will be able to combine operating expenses across the two organizations totaling $55 million to $65 million annually. Despite seeing drops in its stock price over 2001, ONI had a good position in cash and convertible assets, with close to $1 billion in total assets on hand.

?Loring Wirbel

EE Times

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