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3/5/2010
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Ciena Posts $53 Million Loss In Q1

The networking equipment provider is about to double its revenues by acquiring Nortel Network's Metro Ethernet unit for $769 million.

Reporting a first quarter loss slightly higher than expected, Ciena Corp. is bracing for a bigger event later this month when it is scheduled to absorb Nortel Network's Metro Ethernet unit.

The acquisition will roughly double Ciena's revenues, which were $175.9 million in the first quarter.

The networking equipment provider reported a $53.3 million loss versus a $24.8 million loss in last year's first quarter. In the face of the daunting challenge of integrating the Nortel unit, Ciena chief executive Gary Smith was optimistic about Ciena's plan for merging the Ethernet unit.

"Our ongoing customer interactions indicate strong validation of the value of the combined company," said Smith in a statement, "and the integration planning activities are proceeding well and on schedule. "We continue to expect the transaction to close later this month, and will soon be providing updates on several important milestones related to the integration timeline, including the organizational structure of the new company and its leadership team as well as detail on our combined product portfolio."

Ciena is paying $769 million for the Nortel unit, after beating Nokia Siemens Networks in spirited bidding. Smith has hailed the synergy of the Ciena-Nortel combination, noting that the two corporate entities merge complementary technologies in switching and transport.

The merged operations, according to Ciena, will deliver a practical path for customers wishing to transition to automated, optical Ethernet-based networking.

Ciena also has an important contract to provide base station switching for WiMax provider Clearwire. In an analysts meeting, Ciena's senior vice president of strategic planning Tom Mock indicated the Nortel acquisition will eventually help Ciena deliver more robust networking.

He said the Nortel solutions will help Ciena upgrade from today's 10G networks as they evolve to 40Gnetworks -- and later to 100G.

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