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Ciena (CIEN) Spurs Network Transformation With Several Alliances

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Zacks Equity Research
·5 min read
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Ciena Corporation CIEN recently joined forces with a telecommunications service provider company — TekSavvy Solutions Inc. — to support the deployment of the latter’s long-haul fiber network between Toronto and Windsor. Markedly, the installation of the enhanced broadband infrastructure will be done by utilizing Ciena’s much-acclaimed coherent optical flexible grid solution. Shares of the Hanover, MD-based company inched up 2.4% to close the trading session at $54.46 on Jan 14.

This development comes as a boon for TekSavvy, especially at a time when service providers are migrating toward a more adaptive network that capitalizes on state-of-the-art technological innovation for customizable service delivery while catering to accretive traffic requirements and dynamic customer preferences. Notably, the deployment of the optical solutions will be carried out through the first six months of this year.

Headquartered in Chatham, Ontario, TekSavvy is a leading Internet Service Provider (ISP) that offers business, residential and wholesale telecom services to more than 300,000 customers. With more than 20 years of experience, the company is committed to boosting the overall connectivity in the underserved areas of Canada to eliminate digital divide. As Canada’s largest independent telco, TekSavvy aims to deliver fiber Internet services to more than 60,000 businesses and households on the back of its planned broadband infrastructure investments amounting to more than $250 million.

With improved network facilities in Southwestern Ontario, the 600-km fiber ring that encompasses 18 points of presence in major markets is expected to be a big move in the deployment of disaggregated wholesale services while pushing its fiber-to-the-home investments across the region. As part of the collaboration, the Canada-based ISP will leverage Ciena’s innovative 6500 Packet-Optical Platform and Manage, Control and Plan (MCP) domain controller. Notably, the latest deployment drive is part of TekSavvy’s five-year investment plan.

Powered by WaveLogic coherent optics, the 6500 platform unites Optical Transport Network and packet capabilities in a single platform to streamline operations and maximize operational efficiency. Moreover, its 400G engine significantly improves transport economics with an optimized footprint. MCP is a cloud-native platform that accelerates end-to-end operational workflows through software-defined control and automation. That said, Ciena will likely be an ideal partner for TekSavvy to bolster network transformation with its industry-leading portfolio of intelligent optical networking solutions and high bandwidth applications.

In another development, Ciena teamed up with Consolidated Communications CNSL to modernize the latter’s network with automation capabilities on the back of its advanced Adaptive IP solution. This major development will aid Consolidated, especially at a time when consumers are migrating toward a virtual ecosystem that can seamlessly support emerging 5G services and reliable connectivity with a streamlined network infrastructure. Lightstorm Telecom Ventures, a carrier-neutral infrastructure provider, also tapped Ciena to deploy network management, coherent optics and automation software in a bid to revolutionize the Over-the-Top ecosystem in India with high-bandwidth content.

Markedly, Ciena is confident about its business model and is likely to benefit from growing demand for packet-optical transport and switching products as well as service management software. It is investing in the data and optical fiber market to capitalize on the tremendous growth opportunities offered by bandwidth demand from network service providers, while boosting its Packet Networking portfolio to capitalize on 5G. Fueled by its technology leadership, it is focused on the expansion of its Web Scale IT Architecture in the enterprise market by launching products like chipsets, metro architecture and mobile backhaul solutions.

Ciena has a long-term earnings growth expectation of 16%. The company topped earnings estimates thrice in the last four quarters. It delivered a trailing four-quarter positive earnings surprise of 26.8%, on average. The stock has rallied 27.1% compared with the industry’s growth of 24% in the past year.

Ciena currently has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader industry are Comtech Telecommunications Corp. CMTL and Qualcomm Incorporated QCOM. While Comtech sports a Zacks Rank #1 (Strong Buy), Qualcomm carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Comtech delivered a trailing four-quarter positive earnings surprise of 2%, on average.

Qualcomm delivered a trailing four-quarter positive earnings surprise of 17.3%, on average.

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