Ciena Sales to Sprint Should Remain Steady, With Perhaps Even a Blip Up

Implications: 1. Ciena has been getting 10 percent or more of its business from Sprint. 2. One may as well say that Ciena’s DWDM boxes are going to be in the carrier’s network forever. 3. The deployment of more Cisco Systems CRS-1s at Sprint will probably result in additional business for Ciena.  

Analysis:  It might be thought that with the IP department running transport at Sprint, and its belief that Cisco Systems can solve problems for everything, that there would be a negative impact on Ciena.  However, Ciena has such a huge installed base in the Sprint network including 96-channel capable DWDM systems.  There is a lot to fill and it just adds up.  

With Sprint having all of the problems with Alcatel, the service provider actually overlayed old Alcatel routes with Ciena equipment within the last two years.  So, there is quite a bit of unfilled Ciena gear – and it is cheap to add.  Another positive factor for Ciena is that reality is finally sinking in at Sprint about the challenges of its older fiber and the polarization mode dispersion with the Cisco/StrataLight solution.  While it technically works, it is just very expensive.  While the planners at Sprint knew about these hurdles, others apparently hid them.  Eventually, a bright light was shined on the IP people (perhaps by finance) and they appear to be going back to using the short reach interface -- and will just use the traditional Ciena system.    

Sprint spending at Ciena could stay level for a while – and it could possibly go up – but as more of a blip -- as Sprint pushes more of the new Cisco CRS-1s out in the network and buys more 40-gig elements.  Still, once they are all out there, there will be a lot of overcapacity -- then it is back more into the steady growth mode for Ciena’s DWDM as well as for the other stuff.