Ciena’s surprise announcement of its plans to acquire Ethernet access vendor Worldwide Packets left some analysts scratching their heads yesterday, largely because Ciena declined to offer many details on key justifications for the deal and its terms.

In particular, analysts puzzled over the purchase price — $200 million in cash, $15 million in assumed debt and 3.4 million shares of Ciena stock, which, at Tuesday’s closing price of $26 per share, comes to roughly $304 million. That’s slightly more than ten times the revenue WWP earned last year. Analysts argued that the benefits of some of Ciena’s earlier acquisitions, announced with similar optimism, didn’t always become clear in the long run.

Ciena CEO Gary Smith argued that those past acquisitions have been great contributors of technology, if nothing else. And the WWP acquisition, he said, strengthens Ciena’s market share and presence (both within AT&T, where it diversifies Ciena’s relationship with one of its largest customers, and elsewhere) and expands its carrier Ethernet expertise. Ciena expects WWP to be “accretive” (i.e., a contributor to earnings) within a year of the deal closing, which it expects to occur sometime before May.

WWP’s revenue is expected to ramp this year, Ciena said, though they won’t say how much. But as Morgan Keegan analyst Simon Leopold pointed out in a research note today, “If we assume [WWP’s] sales double in 2008, [the purchase price] is still expensive.” And it comes at a time when valuations across the industry are notoriously low. One analyst on Wednesday’s call remarked that Ciena could have acquired “two Advas” (meaning Adva Optical Networking, which competes in the same space) for the same price.

Further complicating the matter is Ciena’s vow to continue to honor WWP’s partnership with Alcatel-Lucent, Ericsson and Tellabs — all competitors of Ciena’s.

One of the factors Ciena considered in putting a price on WWP is its recent selection by AT&T for what Ciena calls a “significant” multi-year deployment. Ciena offered scant details on the deal, and AT&T hasn’t yet answered questions on the subject. The deal is somewhat surprising, since WWP is known for offering active Ethernet architectures, and AT&T’s fiber-to-the-premises deployments have been exclusively passive architectures. Although WWP’s gear has been deployed in several residential FTTP applications (like this one), AT&T will deploy WWP’s gear to deliver Ethernet services to businesses, Ciena said, adding that the deal also includes backhaul opportunities.

One analyst on Wednesday’s conference call asked if AT&T had “pushed” Ciena to do the deal, perhaps because the carrier liked WWP’s products but typically doesn’t buy from vendors as small as WWP (which employs just 145 people).

“We’ve seen other companies buy privately held vendors, often times because the carrier’s saying, ‘If you own this, we will buy it,’ and yet we never saw the revenues materialize,” one analyst said.

Smith admitted that, when sales of WWP gear to AT&T start ramping early in the 2009 fiscal year, AT&T will likely be the biggest customer of those products that year. But he argued that AT&T was not the only reason for the deal, adding that WWP has more than 100 other customers, and Ciena has over 300—many of which are potential purchasers of WWP gear. “Clearly it is incredibly helpful to have a large sponsoring customer like AT&T,” Smith said. “But we also we see opportunities to take this to other customers that we already have. And WWP has done a good job garnering an impressive customer base as well.”

Later, he added, “The time-in and time-to-market aspect of this was very important to us, in terms of integrating the products from our sales force so our sales force can go out and sell. And also making sure new platforms were linked from a technology point of view. The medium to long-term, defined as fiscal year 2009, dictated that this was right thing to do at this time.”

In addition to giving Ciena more Layer 3 technology than it previously had, Ciena says WWP’s focus on Ethernet is consistent with its own commitment to embracing Ethernet as an increasingly vital technology in carrier networks.

“[WWP] has addressed a number of the operations and management, service and provisioning pieces of Ethernet,” said Steve Alexander, Ciena’s chief technology officer. “When you look at how a carrier operates, the ability to have a demarcation capability, the ability to provision remotely and diagnose what’s going on in the network is very important. Worldwide has basically solved many of those problems.”

“We believe the deal makes sense strategically, as WWP will allow Ciena to bolster its Ethernet portfolio to service the growing carrier Ethernet market,” UBS Investment Research analyst Nikos Theodosopoulos said in a note today. “However, we question the valuation.”