Ciena sells specialty business to cut costs

N.H. buyer to make optical fibers, supply Linthicum company

May 14, 2002|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

Ciena Corp., a Linthicum maker of fiber-optic equipment, has sold a small piece of its business to a telecommunications company in New Hampshire.

Publicly held StockerYale Inc. acquired Ciena's specialty optical fiber group in a cash and stock deal. Financial details were not disclosed.

Ciena's specialty optical-fiber group makes a kind that the company needs for some of its products. The company couldn't find another telecommunications business that made the same fiber, so Ciena made it in-house.

StockerYale signed a three-year deal with Ciena to be its primary supplier of the specialty optical fibers, the company said yesterday. StockerYale is expected to start shipping the products during the fourth quarter.

"It does highlight what you'll see more of in the [telecom] space, which is trying to get some of that fixed manufacturing cost off the books," said Rick Schafer, a research analyst for CIBC World Markets in Denver.

Shares of Ciena closed yesterday at $6.98, up 45 cents. Shares of StockerYale closed at $5.30, up 52 cents.

Ciena spokesman Glenn Jasper said that the specialty optical-fiber group was not a revenue-generating part of Ciena's business and that the decision to sell it was a cost-saving measure.

"By selling it to them and then buying as needed, it's just a much more efficient way to run the company," he said.

Jasper said the handful of employees who worked in Ciena's optical-fiber group have been reassigned to other parts of the company.

Paul Jortberg, senior vice president of the optical components division of StockerYale, said no decision had been made on whether the specialty fibers would be made in Maryland or at StockerYale's headquarters in Salem, N.H.

"It was a nice addition to our portfolio of products," Jortberg said.

The sale is not the first time Ciena has sold part of its business.

Last year, the company sold 80 percent of its stake in ATI International Investments Inc. for an undisclosed amount. Ciena had bought ATI in 1998 in a stock deal then valued at $52.5 million, according to documents filed with the Securities and Exchange Commission.

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