Ciena (CIEN) to Power Rural Connectivity in Gigaclear Network

Ciena CorporationCIEN recently announced that Gigaclear Networks, a leading provider of full fiber rural broadband connectivity in the United Kingdom, will utilize its optical and intelligent software solutions to better serve the company's customers. The strategic deal will empower Gigaclear with a programmable infrastructure to intelligently manage its bandwidth, drive innovation and expand services beyond the London metropolitan area.

In particular, Gigaclear will be able to offer greater access to high-speed broadband service with rapid backhaul connections from London to Bristol and Northants. These include rural communities in Devon, Somerset, Herefordshire and Gloucestershire. In addition, Gigaclear will aim to leverage Ciena's 6500 Packet Optical platform, in a bid to boost its network performance. Powered by WaveLogic coherent optics, the 6500 Packet Optical platform offers a robust infrastructure that is highly scalable and cost-effective for a rural set up. The transaction, therefore, is likely to be highly beneficial for extending the rural footprint of Gigaclear.

On the other hand, the deal would increase scope for Ciena's customer engagement, as well as boost sales, leading to a recurring revenue stream. The company's top line is expected to benefit from rising demand for packet-optical transport and switching products, integrated network and service management software. The company has been diversifying its footprint in data-center connectivity. This has enhanced its reach into a broader end-to-end optical and data-equipment market.

Ciena has outperformed the industry in the past year, with an average return of 52.8% compared with 28% growth for the latter. The company is increasingly investing in the data and optical fiber market, in order to cash in on the tremendous growth opportunity presented by rising bandwidth demand from network service providers. Moreover, network upgrades by telecom carriers to meet increasing demand bodes well for the company's long-term growth prospects. Currently, the company is one of the leading suppliers of 40G and 100G optical transport technology.

In addition, Ciena is making efforts to expand its Web Scale IT Architecture in the enterprise market by launching products like chipsets, metro architecture and mobile backhaul solutions. Fiber Deep technology represents a big opportunity for the company, going forward, driven by the strong adoption of its products among all major cable operators in the global market. We believe Ciena's strong product portfolio will boost its top-line growth in the long run.

Ciena remains confident about its business model and ability to achieve the three-year financial targets on the back of its diversification, global scale and innovation leadership. The company is augmenting its Packet Networking portfolio with new Adaptive IP capabilities, coherent optics and purpose-built hardware platforms to enable service providers to capitalize on 5G.

Moreover, during third-quarter fiscal 2018, Ciena completed the acquisition of Packet Design. The buyout has accelerated Ciena's software strategy and contributed toward its long-term financial goal of growing the company's Blue Planet and associated services business, by approximately 14-16% annually over the next three years. The expansion of Blue Planet software business and network automation capabilities has provided the company competitive differentiation. The buyout has helped accelerate Ciena's Blue Planet software strategy by extending its intelligent automation capabilities beyond Layer 0 to 2 into Layer 3, with critical new features to support a broader range of closed-loop automation and optimization use cases across multi-layer multi-vendor networks.

Ciena currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader industry are United States Cellular Corporation USM , Sprint Corporation S and Telenav, Inc. TNAV , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

United States Cellular surpassed estimates in each of the trailing four quarters, the average positive earnings surprise being 108.1%.

Sprint has long-term earnings growth expectation of 19.6%. It has beat estimates in each of the preceding four quarters, the average positive earnings surprise being 320.8%.

Telenav has outpaced estimates in each of the last four quarters, the average positive earnings surprise being 12%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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