About Ciena Corporation
Ciena Corp.’s optical transport and switching equipment increases the capacity of fiber-optic networks to meet the rising demands of video, data, and voice traffic. Users include telecommunications providers, cable TV companies, large-scale web services firms, submarine network operators, and governments. Besides hardware, Ciena sells software to manage networks and automate many network tasks, as well as services for designing, deploying, and managing networks. The company’s biggest customers are companies like Verizon and AT&T and CenturyLink that operate large communications networks. More than half of sales are to US customers.
Ciena operates in three segments: Networking Platforms, Global Services, and Software and Software-Related Services.
Networking Platforms is the company's biggest money generator, accounting for about 80% of sales. It supplies hardware and software that includes the 6500 Packet-Optical Platform and the 5430 Reconfigurable Switching System. The segment also sells operating system software.
Global Services, about 15% of sales, provides services such as consulting, network design, installation and deployment, maintenance support, and training.
The small but growing Software and Software-Related Services segment, about 5% of sales, includes its Blue Planet software platform and network virtualization, management, control and orchestration software, and software-related services such as subscription, installation, support, and consulting services.
Ciena has operations in North America, the Caribbean and Latin America, Europe, the Middle East, Africa, and the Asia/Pacific. More than 55% of its sales come from customers in the US, 20% comes from customers in the Asia/Pacific region, and 15% comes from the Europe, the Middle East, and Africa region.
To produce its hardware, the company relies on contract manufacturers with plants in Canada, Mexico, Thailand, and the US.
Sales and Marketing
Ciena counts more than 1,300 customers such as AT&T and NASA in the US and Orange (France), Telefonica (Spain), and Vodafone (UK) overseas. It uses a direct sales force as well as resellers.
AT&T and Verizon combine to account for more 20% of Ciena’s revenue. Overall, the company’s 10 biggest customers, most of them telecom companies, account for more than 55% of revenue.
Ciena generated steady revenue gains between 2014 and 2018 with annual increases averaging more than 8% by supplying products to meet the growing demand for network capacity. Three years of rising net income were interrupted with a loss in 2018.
In 2018 (ended October), revenue rose about 10% to $3.1 billion from 2017 on higher sales in each segment led by Networking Platforms, which added more than $250 million in sales from its Waveserver stackable interconnect system. Sales of Software and Software-related Services jumped about 25% and Global Services sales rose about 7%. Sales were higher in all geographic regions except for the Caribbean and Latin America where they slipped about 15%.
Ciena posted a loss of $344 million in 2018 compared to net income of $1.3 billion in 2017. The company had a $1.1 billion tax benefit in 2017 while it had a sizable tax bill in 2018. Before taxes, Ciena had income of about $49 million in 2018 and $156 million in 2017.
The company had cash and equivalents of about $745 million in 2018 compared to $650 million in 2017. Operating activities generated $229 million in 2018, while investing activities used about $99 million and financing activities used about $42 million.
Ciena is diversifying its customers and products. With its two biggest customers AT&T and Verizon supplying a fifth of revenue, Ciena would be well served to add clients outside the telecom infrastructure realm. To do that, it is looking for customers among companies that manage servers and content on a large scale. Representative of that customer class, not necessarily Ciena customers, are Facebook, Google, and Netflix. Ciena’s non-telecom customers accounted for about 35% of revenue 2018. Some of that increase was fueled by higher sales of Ciena’s Waveserver product line, which is aimed at large web companies and similar customers. Waveserver sales increased about $253 million in 2018, up about $90 million from 2017.
Although hardware is the foundation of Ciena’s business, it is focusing attention on its Blue Planet software platform for managing networks. Many updates and fixes can be made to networks through software rather than switching out hardware components. Ciena changed its sales strategy for Blue Planet, which it now pitches as one component of an overall software and software-related service. The company said the approach enables it to leverage use its insights into customers’ networking problems to create appropriate software. Ciena emphasized the importance of that business by making Blue Planet a division within the company.
Mergers and Acquisitions
In 2018 Ciena acquired DonRiver, which specializes in federated network and service inventory management , for $42.3 million . DonRiver adds to Ciena’s capability to increase software automation.
Also in 2018 the company bought Packet Design, a provider of network performance management software, for $41.1 million. Packet Design should improve Ciena’s adaptive networks technology.
7035 RIDGE RD
Hanover, MD 21076-1426
Phone: 1 (410) 694-5700
Employer Type: Publicly Owned
Stock Symbol: CIEN
Stock Exchange: , NYSE
SVP Finance and CFO: James E. Moylan
Chairman: Patrick H. Nettles
President and CEO: Gary B. Smith
Employees (This Location): 964
Employees (All Locations): 6,013
Greenwood Village, CO
Shawnee Mission, KS
Spokane Valley, WA
Rio De Janeiro, Brazil
Frankfurt Am Main, Germany
Seoul, South Korea