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CIENA Reports Third Quarter Revenue of $458.1 Million, Adjusted Net Income of $0.17 per Diluted Share

New Market Analysis Confirms Shift in Spending From Legacy to Next-Generation Systems; CIENA Leads Intelligent Optical Networking Market According to The Aberdeen Group

Ciena Corporation (NASDAQ: CIEN) today reported revenue of $458.1 million for its third fiscal quarter ended July 31, 2001, including revenue from six new customers. Ciena's third quarter sales represent sequential revenue growth of more than seven percent over the Company's fiscal second quarter revenue of $425.4 million, and an increase of more than 96 percent as compared to the same period a year ago when the Company reported revenue of $233.3 million.

Adjusted net income for the third quarter, which excludes deferred stock compensation charges, payroll taxes on stock option exercises, a benefit from receipt of a previously written down receivable, and amortization of intangibles and goodwill, was $58.0 million or, $0.17, earnings per diluted share. This represents an increase of approximately 100 percent and 70 percent respectively, when compared with adjusted net income for the same period a year ago of $28.8 million or, $0.10, earnings per diluted share, exclusive of payroll tax on stock option exercises, provision for a doubtful account, gain on settlement of an accrued contract obligation and amortization of intangibles and goodwill. Consolidated statements of operations showing net income inclusive of the aforementioned items have been included with this press release. Consensus of First Call estimates for Ciena's third quarter fiscal 2001 was $0.16, earnings per diluted share.

"In a difficult telecom equipment environment, Ciena continues to differentiate itself by demonstrating strong year-over-year revenue and net income growth, and by taking market share," said Gary Smith, Ciena's president and CEO. "The past year has been a challenging one for the industry, but seismic shifts in technology have historically caused market turmoil. This market turmoil, in turn, sets the stage for new market leaders to emerge and we believe Ciena is positioned to be one of these leaders."

Quarterly Highlights

Ciena continues to meaningfully diversify its growing customer base, adding revenue from six new customers in the third quarter. The Company's total revenue-generating optical networking equipment customer base now totals 55, of which, a record-high 45 contributed to Ciena's revenues during the most recent quarter. In addition, sales of CoreDirectorÔ, Ciena's industry-leading next-generation, intelligent optical core switching platform, surpassed ten percent of total revenue for the third sequential quarter and increased 20 percent over the previous quarter.

Market Outlook

Recent market studies by industry analyst firms, including The Aberdeen Group, have confirmed that service provider spending is shifting from legacy systems to next generation systems. Based on a survey of 74 carriers and service providers, Aberdeen published a report entitled Shining the Light on Intelligent Optical Networking, Redefining the Market Yields New Results: A Demand Side Study. In this report, Aberdeen indicates that Ciena, with its focus on next-generation intelligent optical networking systems, is the best positioned optical equipment vendor in the marketplace.

Aberdeen's research also discussed the following:

• Money historically spent on circuit switching and Sonet/SDH transport gear will be increasingly used on next-generation "intelligent" optical systems.
• Long-haul DWDM transport is the primary market for next-generation systems, but metro optical transport and core optical switching will be the fastest growing segments over the next five years.
• Ciena is the overall intelligent optical networking leader with an estimated 25 percent market share.
• Ciena also leads the long-haul transport and the core switch markets with 30 percent and 52 percent market share, respectively.

"While the optical networking industry is perceived to be in a serious downward spiral, our research shows that the market has, in fact, shifted into next-generation systems that are not offered by the traditional networking giants," said Andrew McCormick, senior analyst, optical communications at Aberdeen. "There remains significant opportunity for next-generation optical platforms as purchasing patterns shift away from traditional solutions."

"Aberdeen and others are uncovering additional evidence that points clearly to a shift in carrier spending from legacy equipment to next-generation systems," said Ciena's Smith. "We continue to believe that Ciena, with our exclusive focus on next-generation products, stands to be one of the primary beneficiaries of this major shift."

Organizational Update

In addition, the Company announced today that effective immediately, Jesús León, Ciena's senior vice president, metro transport division, also will assume leadership of the Ciena's Metro Switching Division, replacing Alnoor Shivji, who has left Ciena to pursue other interests.

Business Outlook

Commenting on Ciena's business outlook Smith said: "Though the overall telecom equipment market is likely to show continued slowdown over the next year, we believe that our portion of the market - next-generation systems - will continue to grow as carriers redirect capital expenditures toward solutions that lower costs and increase revenues. We expect that if we can continue to take market share from our legacy competitors, we will be able to deliver continued annual revenue growth."

Live Web Broadcast of Q3 Results Discussion

In conjunction with this announcement, as previously announced, Ciena will host a discussion of its third fiscal quarter results with investors and financial analysts on Thursday, August 16, 2001 at 8:30 AM (Eastern). The live broadcast of the discussion will be available via Ciena's homepage at www.Ciena.com. An archived version of the discussion will be available shortly following the conclusion of the live broadcast on the Investor Relations page of Ciena's website at: www.Ciena.com/investors.

(Consolidated Statements of Operations, Adjusted Consolidated Statement of Operations and Consolidated Balance Sheets follow)

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Ciena CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(unaudited)

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