This article is from the August 15, 2001, issue of Red Herring magazine.

Ciena (Nasdaq: CIEN) CEO Gary Smith Founded 1992 Employees 3,860 Linthicum, MD 410/694-5700www.ciena.com

Market value* $12,763.6 Next fiscal year EPS $0.73 Trailing 12-month revenue* $1,298.2 Trailing 12-month net income* $56.5 *In millions

MARKET Develops and manufactures optical-networking equipment for ISPs and long-distance, local, and wireless-communications service providers. Products include MultiWave CoreStream and MultiWave Sentry long-distance optical-transport equipment, MultiWave Metro short-distance optical-transport equipment, MultiWave CoreDirector intelligent optical core-switching equipment, Lightworks On-Center network-management software, and MetroDirector K2, a switch for metropolitan area networks. In March, acquired Cyras Systems, a provider of optical-networking systems, for approximately $2.2 billion. In June, announced new capabilities for MultiWave CoreStream, including the ability to scale to 3.2 terabits per second within service providers' existing transmission bands. Customers include AT&T, Cable and Wireless, Level 3 Communications, and Sprint. Competes with Alcatel, Cisco Systems, Lucent Technologies, and Nortel Networks.FINANCE In February 2001, completed a public offering of 11 million shares of common stock at $83.50 per share. Revenue for second quarter 2001 (ended April) was $425.4 million, up 129.1 percent from the same quarter of the previous year. Net loss for the quarter was $50.7 million, compared with net loss of $18.4 million for second quarter 2000. CEO was previously vice president of sales and marketing at Intelsat.THE HERRING TAKE The acquisition of Cyras, with its flagship product, MetroDirector K2, has launched Ciena into the metro switching business. Merging the two companies, however, will bring the usual personnel integration challenges.

Extreme Networks (Nasdaq: EXTR) CEO Gordon Stitt Founded 1996 Employees 1,000 Santa Clara, CA 408/579-2800www.extremenetworks.com

Market value* $2,914.3 Next fiscal year EPS $0.11 Trailing 12-month revenue* $468.6 Trailing 12-month net income* -$56.9 *In millions

MARKET Develops ethernet switches for service providers, large enterprises, metropolitan area networks, and large enterprise networks. Products include Summitt switches, which have fixed configurations; Alpine switches, which can be configured so that customers can provide network services remotely; Black Diamond switches, configurable switches for data centers; and Extremeware policy-management software, which allows service providers to prioritize bandwidth allocation. In January, acquired the broadband access-equipment developer Optranet for approximately $73.2 million. In March, acquired WebStacks, another broadband access-equipment developer, for approximately $74.7 million. In June, announced a deal with China Telecom to produce switches for its metropolitan area networks. Partners include Tech Data, Ericsson, and GE Access. Customers include AT&T, Compaq Computer, Enron, and MSNBC. Competes with Cisco Systems, Foundry Networks, Riverstone Networks, and Nortel Networks.FINANCE Revenue for third quarter 2001 (ended March) was $112.1 million, up 66.6 percent from the same quarter of the previous year. Net loss for the quarter was $70.1 million, compared with net income of $9.1 million for third quarter 2000. CEO cofounded the company and previously cofounded Network Peripherals, where he was vice president of marketing and vice president and general manager of the OEM business unit.THE HERRING TAKE Extreme Networks has dipped below profitability by shelling out cash for Optranet and WebStacks. But there is continued demand for the company's products, as evidenced by its new customer, China Telecom.

ONI Systems (Nasdaq: ONIS) CEO Hugh Martin Founded 1997 Employees 667 San Jose, CA 408/965-2600www.oni.com

Market value* $3,412.0 Next fiscal year EPS -$0.17 Trailing 12-month revenue* $101.1 Trailing 12-month net income* -$133.8 *In millions

MARKET Develops, markets, and sells metropolitan-area and regional optical-networking equipment. Products include the Online transport platform, which uses dense wavelength division multiplexing (DWDM) to allow network service providers to share one wavelength for many customers. Other products include the Optx family of software, which allows communications service providers to manage their networks and automatically provision bandwidth and wavelength services from remote locations. In February, acquired technology and other assets from Finisar's Opticity line of optical-transport components for $51.3 million. In June, announced that two new multiplexers -- its Onwave Escon and Onwave OC-192/STM-64, which further increase service providers' system capacities -- would be available in third quarter 2001. Partners include Juniper Networks and Brocade Communications Systems. Customers include Qwest Communications, Williams Communications, Dynegy, and Progress Telecom. Competes with Nortel Networks, Ciena, and Sycamore Networks.FINANCE Revenue for first quarter 2001 was $45.1 million, up 1,152.8 percent from the same quarter of the previous year. Net loss for the quarter was $31.1 million, compared with net loss of $34.2 million for first quarter 2000. CEO was previously entrepreneur-in-residence at Kleiner Perkins Caufield & Byers and president of 3DO.THE HERRING TAKE ONI Systems was an early entrant to the metropolitan optical market. Other, less-established competitors will find the economic climate much less friendly and may have a tougher time entering the public markets.

Riverstone Networks (Nasdaq: RSTN) CEO Romulus Pereira Founded 2000 Employees 500 Santa Clara, CA 408/878-6500www.riverstonenet.com

Market value* $1,934.8 Next fiscal year EPS N/A Trailing 12-month revenue* $126.7 Trailing 12-month net income* -$58.0 *In millions

MARKET Manufactures routers and switches for ISPs and application, content, and metropolitan-level service providers. Products can be integrated with service providers' legacy networks and allow service providers to account for bandwidth by the bit and in real time, enabling them to charge their customers accordingly for specialized services. In March, partnered with ZTE, a telecommunications carrier, to resell Riverstone's products in China. In June, introduced a new router that supports 12 ports per rack unit and will support 10-gigabit ethernet and 10-gigabit ethernet over WDM (wavelength division multiplexing). Also in June, announced that Korea Telecom would use Riverstone routers in its metropolitan area networks in South Korea. Partners include Tellabs, Terayon, Lucent Technologies, and Sonus Networks. Customers include British Telecommunications, EarthLink, Metricom, Vitts Networks, and Telseon. Competes with Cisco Systems, Extreme Networks, Foundry Networks, Juniper Networks, and Siemens.FINANCE Completed a $120 million IPO in February 2001. Revenue for first quarter 2002 (ended May) was $44.2 million, up 180 percent from the same quarter of the previous year. Net loss for the quarter was $4.7 million, compared with net loss of $12.5 million for first quarter 2001. CEO was previously chief operating officer of Cabletron Systems.THE HERRING TAKE Riverstone has depended on a small number of customers for the bulk of its revenue. However, the company is expanding into Asia and Europe with additional offices and distribution partners, which should diversify its risk.

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 – Architecturally impaired