Optical networking vendor Ciena Corp has again declared war on its struggling competitors and plans to use its financial muscle in the shape of $1.4bn in cash and short-term investments to grab market share and grow revenue at a time of an unprecedented downturn in carrier spending.
After reporting better-than-expected full-year figures, the Linthicum, Maryland-based company said it expects revenue in its current first quarter to show a 10% increase on the previous three months after an improvement in orders.
CEO Gary Smith said that the financial strength and commitment to continued investment differentiates the company from its competitors, many of which he said are experiencing financial and directional uncertainty.
He said that Ciena has an opportunity to achieve growth in 2003 despite decreased carrier spending. Apart from increasing market share, he said the company is pursuing feature additions and product extensions, and developing new sales channels to increase its addressable market.
This is a familiar refrain from Smith who in December 2001said: Where others in the industry have elected to cut dramatically in attempts to preserve cash and merely survive the market downturn, we can continue to invest in strategic areas such as research and development and sales.
However, Ciena then proceeded to cut costs itself and fired 22% of its workforce in March, with another 450 jobs lost in September as it attempted to return to profitability.
In the fourth quarter to October 31, the net loss was $754.8m, down from a loss of $1.8bn on revenue down 83.2% at $61.9m. For the year, the loss was $1.6bn, down from a loss of $1.8bn on revenue that fell 77.5% to $361.2m.
Ciena also plans to cut future interest charges with an offer to buy $202.9m outstanding convertible loan notes inherited from its purchase of Oni Systems Inc in a move that would save $28.4m in interest payments.
The question now is whether or not Ciena will attempt to increase its addressable market by buying other floundering companies in the same way that it acquired Oni Systems for $900m in February to get into the metropolitan area networks market. It has been criticized for being too impetuous in looking for new sources of revenue rather than keeping its head down and waiting for a market recovery.