Ciena’s CoreDirector replacement could be delayed

The next version of Ciena’s (NASDAQ:CIEN) CoreDirector optical switching platform appears to be delayed, according to George Notter, managing director of communications equipment equity research at Jefferies & Company, who cited multiple unnamed carriers as sources.

Though expectations vary, Notter said in a research note this week that the new product may start shipping some time in the second half of this year and that subsequent back-office testing could push its actual field deployment in some cases to early next year.

“In total, the system is at least one year late vis-à-vis the original delivery dates,” Notter said.

Ciena declined to comment.

As network traffic levels rise, carriers including AT&T may be impatient to replace their existing CoreDirectors with higher capacity versions and move the original gear downstream in their networks. As they were developed in the late 1990s with a capacity of 640 gigabits per second, many customers have interconnected multiple chassis to keep up with traffic growth, sacrificing efficiency in the process, since interconnected boxes waste power and limit throughput.

But the next CoreDirector could offer a six-fold increase in capacity, Notter said.

Ciena has been mum on the subject, saying in a March earnings call that there were no “go-to-market plans” for such a product at the time. But the vendor did say the new product would include functionality that would allow it to be integrated with its 4200 metro optical platform (recently expanded for regional networks), popular for its per-port programmability.

But if the CoreDirector replacement product takes too long, Notter said, carriers could pressure Ciena for pricing concessions or buyback programs for recently purchased gear.

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