Ciena to Acquire Companies; Drops Reseller

LINTHICUM, Md., Feb. 19 -- Telecommunications equipment maker Ciena made announcements today that it will acquire two companies, Catena Networks Inc. and Internet Photonics Inc.

Catena Networks is a private developer of integrated broadband access systems; it has offices in Ottawa, Canada, and in Research Triangle Park, N.C. Internet Photonics, which has offices in Shrewsbury, N.J., and Marlborough, Mass., is a developer of optical Ethernet transport and switching systems.

"The acquisitions of Catena and Internet Photonics are part of CIENA's ongoing efforts to fuel long-term revenue growth and sustained profitability by expanding our addressable market; capitalizing on new growth opportunities in adjacent and complementary markets," said Gary Smith, CIENA's president and CEO. "In the simplest of terms, these acquisitions enhance the scope of the solutions we can offer our customers and further extend CIENA's network reach and presence."

Catena Networks will merge into CIENA, in exchange for 77.5 million shares of CIENA stock. Catena Networks will form CIENA's Broadband Access group, led by Hjartarson, and will be based in Ottawa. CIENA also will assume Catena's employee stock options and warrants, which will be converted into options and warrants to purchase CIENA shares. The transaction is expected to close by the end of third quarter 2004.

Internet Photonics will also merge into CIENA, in exchange for about 24.4 million shares of CIENA common stock, and will become part of CIENA's Metro and Enterprise Solutions group and will continue to operate from its Shrewsbury and Marlborough locations. Internet Photonics' employee stock options will be converted into options to purchase CIENA shares. This transaction is also expected to close by third-quarter 2004. Internet Photonics' customers include cable operators Cablevision and Adelphia, as well as carriers such as TDS Metrocom, who use Internet Photonics' systems for Ethernet private-line services.

It was also reported today that CIENA has dropped the reseller, support and service agreement it forged in 2002 with Acton, Mass.-based Equipe Communications Corp., according to Mass High Tech, a weekly New England technology journal.

Kevin Mitchell, an analyst at market research firm Infonetics Research, told the journal that losing its partnership with Ciena "is a hard blow" for Equipe, which makes a next-generation core switch that runs native asynchronous transfer mode (ATM), an older, stable technology on which many large carriers' networks are built.

"Big carriers don’t like to buy critical network gear from small startups unless the startup has a relationship with a larger player that will commit to supporting the equipment," he said in the article. "So now not only does Equipe have to go after customers without Ciena’s support, it has to do so in a market that’s rapidly disappearing.

"Equipe is in danger of becoming irrelevant," he was quoted as saying.

For more information, visit: www.ciena.com