Ciena Corporation is living proof that you can ride the tech bubble roller coaster and come back to fight another day. From the dark days of the telecom bubble, when its stock lost 75 percent of its value over a five-month period in 2001, Ciena went on to cleverly reposition itself away from a fiber optic supplier of Dense Wavelength Division Multiplexing (DWDM) optical transmission systems, to more of a general “network specialist.” Indeed, its corporate subtitle is, “The Network Specialist.” Even so, it did continue to produce interesting, small-footprint core devices that could be had at a reasonable cost.

 

Today, Ciena announced completion of its acquisition of World Wide Packets (News - Alert), Inc. pursuant to the terms of the acquisition agreement announced on January 22, 2008. World Wide Packets is a privately held supplier of carrier Ethernet switches. Ciena’s acquisition gives Ciena additional Ethernet expertise and products to play in the burgeoning Ethernet access market. This acquisition dovetails nicely with its FlexSelect and Ethernet-over-any-media strategy.

 

“This acquisition enables us to capitalize on our early leadership in converged Ethernet solutions by accelerating the implementation and time-to-market of our Carrier Ethernet portfolio, drawing in new customers and strengthening our position in existing accounts,” said Gary Smith, Ciena president and CEO. “In addition, World Wide Packets brings strong engineering expertise and business acumen in this technology arena, deepening Ciena’s command of this nascent market and furthering our credibility in the space.”

 

Under the terms of the agreement, Ciena acquired all of the outstanding shares of World Wide Packets common and preferred stock in exchange for $196.7 million in cash and approximately 2.5 million shares of Ciena common stock. Ciena assumed all then-outstanding World Wide Packets stock options and substituted them for the right to acquire approximately 0.9 million shares of Ciena common stock. In addition, Ciena assumed $11.3 million in outstanding World Wide Packets debt. Based on the closing price of Ciena’s common stock on February 29, 2008, the aggregate value of the shares issued by Ciena (including option assumptions) is approximately $87.8 million. The Ciena shares issued in the transaction are not subject to lock-up provisions and therefore are freely tradable effective with the close.

 

World Wide Packets will add approximately 180 employees to Ciena, and will continue to operate from its Spokane Valley, Washington and San Jose, California facilities.