Ciena Is Moving to Acquire ONI, Creating a Giant in Networking
LINTHICUM, Md. -- Ciena Corp. agreed to acquire ONI Systems Corp. in an $850 million stock deal, creating a powerhouse in optical-networking equipment and possibly sparking further industry consolidation.</br></br>Hugh Martin, ONI's chairman, president and chief executive, said the companies are "a perfect match," since Ciena specializes in equipment for long-haul networks while ONI provides gear for metropolitan networks. Mr. Martin said he initiated the deal, partly because ONI's telecommunications-carrier customers had expressed "some concern about breadth of product line" and customer support from ONI as a stand-alone company.</br></br>Although Ciena has increased its market share over the past year, the Linthicum, Md., company -- like its competitors -- has been hit hard by plummeting demand for networking gear, as telecommunications carriers rein in spending or struggle to stay in business. Ciena recently warned of sharply falling revenue and a substantial loss for its fiscal first quarter, ended Jan. 31.</br></br>Ciena's top competitors include Nortel Networks Corp., Lucent Technologies Inc., Alcatel SA and others.</br></br>Demand for metropolitan network equipment, however, "is holding up much better than the long-haul" network segment, said Gary Smith, Ciena's president and chief executive. The combination of the companies' product lines stands to be "compelling from a customer point of view," he said.