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Armed with Nortel’s “carrier Ethernet” and “optical networking” businesses, Ciena Corp. would be able to help carriers transition their current network technologies to next-generation networks two to three years faster, officials say. 

 

And that’s the big reason the networking up-and-comer, based in Linthicum, Md., posted a $521 million stalking horse bid last week for Nortel’s (News - Alert) product and technology assets, which include its long-haul optical transport portfolio; metro optical Ethernet switching and transport solutions; Ethernet transport, aggregation and switching technology; multiservice SONET/SDH product families; and network management software products.

 

The ‘stalking horse’ bid - a standard process in bankruptcy proceedings whereby the first qualified bidder (Ciena) selected by the selling company (Nortel) negotiates an agreement to buy its assets - breaks down to $390 million in cash and 10 million shares of Ciena common stock.

 

“The biggest reason for the bid is it helps us get to where we want to go quickly,” Tom Mock, Ciena's senior vice president of strategic planning, told TMCnet. “It’s basically the technology that allows existing telecoms to evolve networks to handle increased capacity.”

 

Mock told TMCnet that with optical networking technology like Nortel’s, operators can provide advanced video, voice and advanced services to end users. This would boost Ciena’s presence in the marketplace among its target market, which includes large enterprises with their own private voice and data networks, as well as large operators.

 

A bigger presence isn’t the only thing Ciena would gain should the bid go through; at least 2,000 Nortel employees would get offers to join Ciena’s global team of network specialists. The proposed acquisition would significantly enhance Ciena’s existing Canadian-based development resources, too, according to the company.

 

Mock told TMCnet the next step after the ‘stalking horse’ bid is posted is a hearing by the U.S. Bankruptcy Court for the District of Delaware. The court reportedly decides when the qualified bid period opens and how long it lasts. Should Ciena come out the winner, it will still face regulatory proceedings.

 

Ciena, which got its start with the launch of its DWDM technology to help network operators get more capacity out of optical fiber, specializes in practical network transition.