Ciena: 2009 won't be 2002

Optical networking firm Ciena Corp last week added its own declining revenue report and negative outlook to the cascade of concerns about how the telecom industry will fare in 2009. The increasing number of companies citing difficult market environments and even going so far as cutting jobs as a precautionary measure probably is leading many of us to thoughts of the last major telecom downturn, the so-called extended telecom nuclear winter of 2001 and 2002 (may have started earlier and lasted longer for some of you).

In any case, a day after the release of the cautionary statements Ciena CEO Gary Smith reassured the rest of us that the current and likely 2009 telecom downturn will not be as bad for telecom equipment vendors as the last crunch. He told Light Reading Europe, "The 2009 landscape is very different from 2001 and 2002. Then, there was overcapacity in the networks and a disregard for economic fundamentals. Today, the demand for network capacity is real, there are market fundamentals, and most Tier 1 carriers are financially healthy. There is very little over-capacity in today's networks."

Smith reiterated that Ciena is seeing a longer sales cycle, but not complete cancellations of orders. Also, it has been well-documented that Internet traffic, especially video traffic, continues to drive capacity demand, and that this demand will require intensive capacity investments through the next few years. Smith's logic sounds pretty valid-let's hope it proves to be so.

For more:
- Light Reading Europe has this story [1]