Ciena to buy equipment installer ATI Telecom would enable acquirer to do 'the whole package'

January 27, 1998|By Mark Ribbing | Mark Ribbing,SUN STAFF

Ciena Corp., a Linthicum developer of telecommunications network equipment, yesterday announced an acquisition that will better enable it to install that equipment.

The company has signed a definitive agreement to purchase ATI Telecom International Ltd., of Norcross, Ga. ATI's Alta Telecom Inc. subsidiary installs wires, switches and other communications devices, including the capacity-boosting systems that have made Ciena one of America's hottest technology companies.

"Currently Ciena's not able to install the whole package for themselves," said analyst Joseph Nyi Nyi of Guilford Securities Inc. in New York. "Now they will be installing it themselves."

Ciena spokesman Denny Bilter said the all-stock deal, initially valued at $52.5 million, "is going to leapfrog Ciena in its installation capability."

Founded in 1992, Ciena has turned heads with its record-breaking financial performance and its technology for expanding the capacity of fiber-optic networks, but now it is finding itself in competition with larger, more diversified firms such as Lucent Technologies Corp.

"In order to be a big player in this area, Ciena needs in-house installation service and support, and this gives it to them," said Michael Gordon, a San Francisco-based analyst for BT Alex. Brown Inc. "It makes them even more competitive with the big equipment providers."

The purchase has been approved by the boards of both firms and is expected to close by the middle of next month. Upon completion of the deal, Alta Telecom will continue to operate under its own name as a subsidiary of Ciena.

Bilter said the transaction will cause no gains, losses or transfers in Ciena's Maryland work force of about 800 employees. Ciena's installation personnel will formally join Alta, but will not be relocated.

ATI, which was founded in 1993, is a private company with about 150 employees.

Bilter did not rule out the possibility of further acquisitions: "That's always going to be an option for Ciena, looking at acquisitions as a way to solve our problems."

Ciena reported revenue of $373.8 million for the 12 months ended Oct. 31, 1997, a nearly seven-fold increase from the corresponding period the previous year. The company expects the ATI acquisition to have a slight positive impact on its 1998 revenue.

ATI President and Chief Executive Officer Ron Newitt said his company and Ciena are a natural match: "The commonality of the customer bases is evident. We can offer improved service by pooling our skills and our talents."

Ciena stock fell $4.375 to $54.50 on the Nasdaq stock market yesterday.

Pub Date: 1/27/98

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