Ciena and TELUS demo 800Gbps fiber optic transmission over 970km link from Toronto to Quebec City; Ciena Earnings & Guidance
Ciena claims to have achieved a worldwide transmission record of 800 Gbps with TELUS, over a record-breaking 971.2km distance. Teams from both organizations worked together and turned up an 800G wavelength from Toronto to Quebec City.
TELUS is one of the early 800 Gbps technology adopters who is in the process of augmenting their network with Ciena’s WaveLogic5 Extreme (WL5e). TELUS will be standardizing WaveLogic 5 Extreme for deployment in the near future. Part of the standardization activities include testing the full capabilities of the product to plan end user service offerings.
TELUS supports 15.3 million customer connections spanning wireless, data, IP, voice, television, entertainment, video and security. The TELUS network extends 6,000 km from Victoria, British Columbia to Halifax, Nova Scotia. Designed with the future in mind, TELUS’s next generation optical network consists of a state-of-the-art, colorless, directionless, contentionless, flexible grid (CDC-F) ROADM architecture with Layer 0 Control Plane, designed to support reliable, fast turn-up and re-route of unpredictable bandwidth demands across the network. Furthermore, it is ready to support new innovations in optical technologies as they become available, including the ability to carry optical channels of any spectrum size across the fiber. This fully flexible, intelligent photonic infrastructure allows for the simple addition of WL5e wavelengths and with that, access to significant cost, footprint, and power benefits.
“TELUS prides itself on having one of the world’s fastest networks and using industry-leading technology to deliver the best experience for our customers across Canada. Our collaboration with Ciena on breaking transmission records is an exciting innovation that speaks to both teams track records of success,” said Ken Nowakowski, Director Planning and Engineering, Transport and IP Infrastructure Development and Operations at TELUS.
Testing continues at TELUS, with planned deployment of WL5e in the coming months. Does this mean 800G will be deployed across long haul links? This is not a yes or no response, but 800G will be deployed where it makes sense in the TELUS network. As has always been the case, the line rate capacity that will be deployed depends on specific link characteristics, number of channels and desired reserved margin by the operator.
Ciena 6500 shelves with WaveLogic 5 Extreme
The real news here is the resulting long-term benefits of the WL5e network upgrade for both TELUS and their end users. TELUS can continue to provide high quality, high speed connectivity to their end users – such as teleworker videoconferencing, multi-player interactive gaming, Internet access for low income families, and even live-streaming the Stanley Cup playoffs – while more efficiently using bandwidth resources and evolving to a greener network.
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Separately, Ciena announced earnings today. For the fiscal third quarter ended Aug. 1, Ciena (ticker: CIEN) reported revenue of $876.7 million, up 1.7% from a year earlier, and ahead of the Wall Street analyst consensus at $971.8 million. Non-GAAP profit was $1.06 a share, nicely above the Street consensus at 83 cents.
“Operating conditions have complicated and extended the time required to deploy and activate new equipment and services with many of our large and long-standing international customers,” the company said in a presentation prepared for its earnings call with analysts on Thursday. “Conditions have made it more challenging to ramp up and operationalize some of our newer international deals and customer wins on their original timelines.”
Ciena also said “customer uncertainty around broader economic conditions is driving more cautious spending behaviors.” It said “longer term fundamental drivers—increasing network traffic, demand for bandwidth and adoption of cloud architectures—remain strong.” Ciena CEO Gary Smith said Covid-19-related market dynamics were likely to adversely impact revenue “for a few quarters.”
Here are a few data points from the company’s earnings presentation:
- Non-telco represented 43% of total revenue
- Direct web-scale contributed 25% of total revenue
- MSO’s contributed 9% of total revenue
- Americas revenue up 9% YoY
- TTM Adjusted R&D investment was $518M
- 535 100G+ total customers, which includes 37 new wins on WaveLogic Ai and 27 new wins on WaveLogic 5e in Q3-2020
- Shipped WL 5 Extreme to almost 40 customers, and the technology is live and carrying traffic in several networks
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Overview of Ciena’s Technology Portfolio:
PROGRAMMABLE INFRASTRUCTURE:
Converged Packet-Optical Networking: Software-defined platforms, featuring Ciena’s award-winning WaveLogic™ Photonics and agnostic packet/OTN switching, designed to maximize scale, flexibility and openness. Optimizes network performance from the access edge, along the backbone, and across ocean floors.
Packet Networking: Purpose-built platforms hosting a common Service-Aware Operating System that are the building blocks for low-touch, high-velocity Ethernet/MPLS/IP access to metro networks.
SOFTWARE CONTROL AND AUTOMATION:
Open software that includes Blue Planet® multi-domain orchestration, inventory, and route optimization to support the broadest range of closed-loop automation use cases across multi-layer, multi-vendor networks, as well as Ciena’s Manage, Control and Plan (MCP) domain controller for bringing software-defined programmability to next-gen Ciena networks.
ANALYTICS AND INTELLIGENCE:
Blue Planet Unified Assurance and Analytics: An open suite of software products that unifies multilayer, multi-domain assurance with AI-powered analytics to provide unprecedented insights that help transform and simplify business operations for network providers.
INNOVATION AND THE ADAPTIVE NETWORK:
▪ WaveLogic™ roadmap extends beyond 400G and with multiple form factors
▪ Adaptive IP™ capabilities for Packet Networking to address fiber densification (5G & Fiber Deep)
▪ Blue Planet® Intelligent Automation Portfolio and closed-loop automation capability strengthened with recent acquisition of Centina
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COVID-19 slowing network operator capex, warns Ciena
“Late in the fiscal third quarter, we began to see some of the effects of COVID-19 manifest in our business to a greater degree than anticipated, as well as increased economic uncertainty,” Ciena CEO Gary Smith said Thursday during his company’s quarterly conference call with analysts, according to a Seeking Alpha transcript of the event. “Specifically, we began to experience a meaningful slowdown in orders and a softening of our outlook. I would stress that the decline is broad based across our service provider’s customers globally whose spend now appears to have been somewhat front-end loaded in the calendar year, resulting in lower orders in our third quarter from a number of our large customers in this segment.”
Smith explained that COVID-19 is affecting the buildout of operators’ networks by making it more difficult for technicians to install equipment inside of buildings, and that the pandemic’s affect on the wider enterprise sector – including on retail and travel specifically – is also causing operators to slow their overall network capital expenditures (capex).
“Customer’s ability and willingness to move forward with new business initiatives is constrained,” he said.
Smith added that, as a result, Ciena is seeing service providers running their networks “hotter” than previously, meaning they’re handling more traffic with less excess capacity as a way to reduce their expenses.
https://www.lightreading.com/opticalip/covid-19-slowing-network-operator-capex-warns-ciena/d/d-id/763704?
Moody’s: Ciena delivers solid results but outlook is weak amid coronavirus disruption
On 3 September, Ciena Corporation reported revenue of $977 million for the third fiscal quarter ending July 2020, up 1.7% year-over-year, above the midpoint of the company’s guidance but below the company’s long-term growth target of 6%-8%. Despite the positive third-quarter results, Ciena guided to an approximate 15% year-over-year revenue decline next quarter because of certain customer spending reductions because of COVID-19 and travel limitations that limit customers’ ability to evaluate and deploy advanced optical systems. The decline would break a string of 20 straight quarters of growth and contribute to a 1% revenue decline for the full year ending October.
We are assuming a further 10% and 5% year-over-year revenue decline in the January and April 2021 quarters before modest growth resumes as bandwidth demand continues to grow by 25% and service provider networks run at or near full capacity. Despite market share gains amid strong long-term secular trends and improving profitability, the update is credit negative and supports our expectation for flat revenue and adjusted EBITDA margins of 19% in fiscal 2021.
A leader in the $15 billion fiber optic networking sector, Ciena continues to gain market share during a flat to slightly lower market
this year, reflecting its diversified revenue drivers that Ciena has developed through its broad portfolio and technology leadership over
several years. These drivers allow Ciena to outgrow the optical market, and its strong leadership in advanced optical technologies
coupled with its strong balance sheet advantages the company when customers evaluate and deploy long-term, mission critical optical
communications infrastructure.
Ciena derives virtually zero revenue from China and, by design, has among the lowest exposure in the fiber optics industry to the China market and the Chinese supply chain. As a result, while not immune to coronavirus-driven global supply constraints and logistical challenges that management pointed to in early March, Ciena is better positioned than most industry players to manage through the current environment. Ciena does not sell to the major carriers in China, but the company does sell to many other countries in the AsiaPacific theater that have had challenges (particularly India), some of which remain in varying degrees of lock down where it is difficult to get to some of their sites for installation.
Despite lower revenue in the October quarter, we expect Ciena will continue to generate solid profitability, with Moody’s-adjusted gross margins of about 47% and Moody’s-adjusted EBITDA margins of about 19%. Gross margins will remain above its 43% to 45% target range for a few quarters because of a higher mix of revenue coming from existing programs as opposed to newer projects, which initially carry lower gross margins. We expect higher than normal gross margins will persist over the next year. Despite continuing to invest in order to bring new product to market and position the company to continue gaining market share, we expect disciplined expense management will support EBITDA margins above 15% in the next two quarters and moving toward 20% to the extent that service provider spending resumes. Adjusted gross debt to EBITDA will approximate 1.2x, free cash flow to gross adjusted debt will exceed 45% (see Exhibit 4) while cash balances of $1.2 billion exceeds $829 million of adjusted gross debt. Ciena’s next maturity (and only debt) is a $690 million secured term loan due in September 2025, under which there are $7 million annual repayments until such maturity date.
https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1244201 (subscription required)