CIENA to Add Storage Service Provider to Arsenal

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Network equipment maker CIENA Thursday said it has inked a definitive agreement to acquire long-distance storage service provider
Akara Corp. in a deal totaling $45 million in stock and cash.

Linthicum, Md.-based CIENA, which competes with the likes of fellow infrastructure equipment makers Cisco , Lucent and Nortel , also announced third-quarter earnings along with its purchase of Delaware-based Akara.

Akara specializes in offering Synchronous Optical Network/Synchronous Digital Hierarchy (SONET/SDH) extended storage area networking (SAN), or simply, long-distance services for enterprises and carriers.

A privately-held firm of 50 employees, Akara focuses on an emerging niche to service companies who want to extend the range of their storage networks
with regard to establishing better business continuity and disaster recovery capabilities.

The company’s goal is to string business continuance applications between data centers with the lowest megabyte per mile cost across existing metropolitan and wide-area networks. Akara relies on SONET/SDH, dark fiber, or DWDM networks to pare operational and capital costs for businesses.

The recent power outage, which blanketed much of the Northeast in darkness August 14, is one such event Akara’s SONET/SDH technology could prepare enterprises for to enable them to get up and running without experiencing data loss or much downtime.

SONET/SDH and optical fiber have emerged as popular technologies for building large-scale, high-speed, Internet Protocol (IP)-based networks. SONET/SDH’s capability to provide high-bandwidth capacity for transporting data is the primary reason for ubiquitous use in the Internet and large enterprise data networks.

One of the last standing storage service providers, Akara will merge with a wholly-owned subsidiary of CIENA and become part of its LightWorks portfolio to help service providers create a automated, edge-to-core network. All remaining outstanding shares of Akara stock will be exchanged for $45 million, consisting of $31 million in cash and $14 million in shares of CIENA stock.

The number of CIENA shares to be issued will be determined based on the average closing price of CIENA stock on the Nasdaq ten trading days preceding the closing date. The transaction is expected to close during CIENA’s fourth fiscal quarter 2003.

CIENA, one of the few equipment providers to survive the dearth in IT equipment spending by its major customers – carriers – over the last few years, also reported its third quarter results.

The company reported revenues of $68.5 million, a boost of 37 percent from the same period a year ago. Revenue for the nine months ending July 31 was $212.5 million. CIENA’s net loss for the nine-month period was $271.5 million, or a net loss of 62 cents per share.

While the loss of 62 cents per share is glaring, it is less than it once was. Once a major provider of optical equipment, the company had to evolve and expand to survive, as CEO and President Gary Smith attested to in a public statement announcing the earnings results.

“CIENA is a very different company than it was just a year ago, and we’re not finished,” said Smith. “We have been taking deliberate steps to evolve into a more comprehensive network solutions provider. This transformation is not an option. If CIENA is going to thrive in today’s telecom environment, we must get bigger, not smaller. We continue to believe that we cannot simply cost-cut our way back to sustainable profitability.”

This story originally appeared on Internet News.

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Clint Boulton
Clint Boulton
Clint Boulton is an Enterprise Storage Forum contributor and a senior writer for covering IT leadership, the CIO role, and digital transformation.

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