When struggling network equipment maker Ciena Corp. embarked on a plan two years ago to buy its way into new markets, the move was regarded as risky. In recent months, even top executives at money-losing Ciena have confessed to being anxious to see all those expensive acquisitions bear a little fruit.
It looks as though they may be able to start breathing a little bit easier. On Thursday, the Linthicum, Md., company reported quarterly revenue growth and increased guidance for future sales, prompting a round of praise from some longstanding skeptics.
“Instead of conserving cash during the telecom crash, Ciena put its ample money pile to work,” TheStreet.com observed, following the company’s earnings report on Thursday. “In three years Ciena spent more than $1 billion to acquire five companies. By adding technologies and, perhaps more important, new revenue, Ciena has partly sidestepped the full impact of the industry’s collapse.”
In 2003 Ciena it bought storage networking startup Akara Corp. and switchmaker WaveSmith Networks Inc. Last year it added Catena Networks Inc., which makes digital subscriber line equipment, and Internet Photonics Inc., which makes optical transport and switching systems.
But while all its acquisitions brought a way for Ciena to expand into newer and more viable markets, they also brought new challenges establishing markets for all these fledgling businesses. And while Ciena’s revenues are up, its net loss in the latest quarter narrowed only slightly, to $74.8 million from $76.2 million the year before. The company remains a long way from profitability. - A.O.
TheStreet.com story
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