Ciena lands modest deal with West Coast phone firm The contract expands its tiny customer base

March 13, 1998|By Mark Ribbing | Mark Ribbing,SUN STAFF

An article March 13 on a new Ciena Corp. contrac misreported the name of the company buying the Ciena equipment. The correct name is GST Telecommunications Inc.

The Sun regrets the errors.

Ciena Corp. said yesterday that it has landed a multimillion dollar deal to provide network equipment for a West Coast telephone and Internet company.

The Linthicum company makes equipment that multiplies the capacity of communications networks. GSM Telecommunications Inc. of Vancouver, Wash., will use the equipment for its lines between San Francisco and Los Angeles.


With the rise of Silicon Valley, the demand for network capacity, or bandwidth, has mushroomed in California. Lisa Miles, a GSM spokeswoman, said the Ciena agreement that was closed Wednesday "allows us to complement our infrastructure and it gives us more bandwidth."

Ciena's equipment will expand the capacity of GSM's fiber-optic network as much as 16-fold. The deployment is expected to be completed by April.

The companies would not disclose the exact value of the agreement. Denny Bilter, a Ciena spokesman, said it was worth less than $10 million.

The deal marks a small victory in Ciena's attempt to diversify its client base.

The company has relied heavily on long-distance firms, Two such carriers -- WorldCom Inc. and Sprint Corp. -- account for more than 90 percent of its revenue. Upon the announcement last month that WorldCom was delaying its deployment of network-expansion equipment, Ciena's stock immediately fell 28 percent.

GSM, by contrast, is a competitive local exchange carrier, or CLEC. Such carriers vie with the Bell companies for local customers, especially businesses. Bilter said that while "a customer like this obviously isn't going to spend as much as WorldCom was spending," landing GSM "kind of chips away" at Ciena's reliance on big long-distance firms.

The GSM deal had been in the works for eight months, well before the WorldCom delay was announced. Ciena's stock rose 81.25 cents yesterday to close at $44.0625 on the Nasdaq market.

Pub Date: 3/13/98

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