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CIENA Reports Fourth Quarter Revenue of $121.0 Million, Earnings Per Share of $0.35

Enhances Resources at Atlanta Technology Center with Agreement to Acquire Atlanta-based AstraCom, Inc

Ciena Corporation (NASDAQ: CIEN), today reported revenue of $121.0 million for its fourth fiscal quarter ended October 31, 1997. This compares with $37.9 million reported for the fourth fiscal quarter of 1996 and $112.2 million for the previous quarter ended August 2, 1997. Net income for the quarter increased to $37.3 million, or $0.35 per share, compared with net income of $10.7 million, or $0.11 per share, for the same period in 1996 and $34.9 million, or $0.33 per share, for the fiscal third quarter.

For the 12 months ended October 31, 1997, Ciena reported revenue of $373.8 million, an increase of 582% over the $54.8 million reported for the year ended October 31, 1996. Net income for fiscal year 1997 was $112.9 million, or $1.09 per share, compared to $14.7 million, or $0.15 per share, in fiscal year 1996.

"In 1997, Ciena began to make its presence known in the telecom marketplace," said Patrick Nettles, Ciena's president and chief executive officer. "Rarely does a young company have the opportunity to have such an impact on a major industry segment."

In addition to significant revenue and net income growth, Ciena closed its first fiscal year as a public company with a total of 841 employees, an increase of 273% over the 225 employed at the end of fiscal year 1996.

"Successfully building our employee base and ramping manufacturing capacity to meet rapidly growing market demand for Ciena's products were only two of the challenges we faced as a result of our exceptional growth to date," said Joseph Chinnici, Ciena's senior vice president, finance and chief financial officer. "As Ciena continues to expand, we will pay close attention to maintaining the infrastructure and controls required to support the organization's growth."

While the significant majority of Ciena's revenue during fiscal 1997 resulted from sales to Sprint Corporation and WorldCom, Inc., the Company announced several new customers, including Japan Telecom Co., Ltd., Mercury Communications Limited (a subsidiary of Cable & Wireless Communications Group) and Digital Teleport, Inc. AT&T also selected Ciena as one of two dense wavelength division multiplexing (DWDM) systems suppliers for its network. Shipments to AT&T are dependent upon successful completion of required AT&T testing programs and are expected to commence in 1998.

Over the course of the last year, the Company took significant steps toward its goal of diversifying its product base, announcing several new products. In the long-distance DWDM market, Ciena introduced the MultiWaveÒ Sentry and the 40-channel MultiWave 4000, the next generations of its original MultiWave 1600. Ciena entered the short-distance DWDM market with the introduction of MultiWave Firefly, a 24-channel, point-to-point system for interoffice applications, and the announcement of its forthcoming MultiWave Metro, a ring-based product for metropolitan applications.

"Ciena will remain focused on expanding our customer base in 1998." stated Nettles. "With entrance into the short-distance market through MultiWave Firefly and MultiWave Metro, we hope to bring the economies and the flexibility of DWDM technology to a broader base of customers, addressing the bandwidth constraints faced by regional Bell operating companies and competitive local exchange carriers."

Ciena also announced that it had signed a letter of intent to acquire AstraCom, Inc., an early stage telecommunications company based in Atlanta, GA. Under the terms of the agreement, Ciena will acquire all the outstanding shares of AstraCom in exchange for 169,754 shares of Ciena common stock, $2.4 million cash and the assumption of certain AstraCom stock options. With closing expected by the end of December 1997, the transaction is valued at approximately $13.1 million and will be accounted for as a purchase. The Company believes the purchase price represents approximately $11.4 million in goodwill and other intangibles, and approximately $1.7 million in net assets assumed.

AstraCom's 15 employees will join Ciena's Atlanta technology development center, providing additional resources for continuing product development efforts for the Company's MultiWave Metro product and expanding Ciena's product expertise in competitive local exchange carrier market applications.

"While Ciena so far has concentrated its efforts on lowering the cost of transport and simplifying the core of service provider networks, it is likely that continued growth in data traffic will spawn bottlenecks beyond the network backbone," concluded Nettles. "Going forward, Ciena will look to expand its network presence and revenue opportunities through ongoing product development efforts and when appropriate, via additional acquisitions, as well as strategic partnerships."