Ciena Corp To Discuss Expanding Leadership in Optical A Q&A on Ciena Strategy for Growth in AI and Data Center Markets Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Karl Ackerman - BNP Paribas Exane - Analyst : Yes. Thank you, gentlemen. I was hoping you could discuss what is the typical cadence for installed base upgrades for your WaveLogic offerings? I asked because you have previously indicated you still ship a fair amount of WaveLogic free today. But clearly WaveLogic 6 extreme and NANO appear differentiated to address current and future needs for higher bandwidth. So if you could address perhaps the upgrade path or cycle, you see of WaveLogic 6 relative to previous WaveLogic offerings, that would be very helpful

Question: Karl Ackerman - BNP Paribas Exane - Analyst : That's correct.

Question: Karl Ackerman - BNP Paribas Exane - Analyst : Yeah. Thank you for that. If I may sneak in another one. One of the main investor questions we've received recently is the adoption of Mopin or managed optical fiber networks? And so I guess the question is if data centers are increasingly dictating the architectures of managed optical fiber networks, is this an opportunity or a risk for Ciena given the company's rather limited exposure today in metro DCI applications, but higher exposure to metro applications and telecom networks. If you could highlight the opportunities and challenges that you see both in metro as well as long haul from the adoption of manage tropical fiber networks, that would be very helpful. Thank you.

Question: Karl Ackerman - BNP Paribas Exane - Analyst : Thank you.

Question: Simon Leopold - Raymond James - Analyst : Thank you very much for doing this and taking the question. I wanted to refer to your slide 22 I think, which is the one in the deck that compares pluggables to performance systems. And what I was hoping you could help us with is understanding some of the underlying assumptions for either cost or architecture of how you arrive at what's presented in this slide as well as what's the distribution of how much of the network is at the different lengths you described in that particular slide? And then I've got a follow up,

Question: Simon Leopold - Raymond James - Analyst : Great. And then just as a follow up, I wanted to ask about this newer opportunity around coherent technology being used inside data centers. I wonder what's your current thinking or best guess as to the timing of when this technology becomes cost effective and necessary. And then how are you thinking about really the economics because today coherent is much more expensive than direct detect. So how do we get to that crossover where the economics make sense? Where do the prices need to be? Thank you.

Question: Simon Leopold - Raymond James - Analyst : Thank you very much.

Question: Ruben Roy - Stifel Financial Corp - Analyst : Thank you. Dave, I guess just to follow up on that last point you made and thinking through what's incremental here. The side presentations which by the way are very helpful. You did talk about starting to hear about potential new applications, AI inference potentially moving closer to the end user close to the edge with clusters moving closer and obvious, obviously, the desegregation of the data center. Just so I get this right. Are you saying today that the incremental opportunity to sort of the way you guys think about the longer term CAGR is relegated to inside and around the data center? Or are you starting to hear about potential incremental opportunities with some of these other WAN type of opportunities you did mention outsourced win as an opportunity just trying to get my arms around. What incremental and what's not?

Question: Ruben Roy - Stifel Financial Corp - Analyst : That's really helpful, Dave. Thank you for that. And then as a follow up, Dino also mentioned an expansion opportunity being potential component sales. So standalone DSP's maybe some mixed signal, high speed analogue sales into the marketplace. Are any of those types of discussions happening today with potential end customers or when you say expansion is that sort of further out.

Question: Ruben Roy - Stifel Financial Corp - Analyst : Thank you very much.

Question: Michael Fleisher - Evercore ISI - Analyst : Thanks. This is Michael Flisher on for Amit. I just wanted to talk a little bit more on the woman Microsoft deal and knowing we can't probably get into any specific details, maybe just broadly about MOFN's and deals. I'm trying to understand something like this or something of this size. What's the incremental amount of optical equipment or types of optical equipment that women will need to purchase to support this kind of deal or just anything you can help that can help us understand the magnitude that these sort of deals can have in terms of (technical difficulty)

Question: Michael Fleisher - Evercore ISI - Analyst : And, and then just to follow up on that kind of 10% to 15% of revenue is that, you know, if we go back probably 3-, 4 years, is that a much smaller figure there for MOFN and Subsea?

Question: Michael Fleisher - Evercore ISI - Analyst : Great. Thanks for taking my question

Question: Karan Juvekar - Morgan Stanley - Analyst : Hi, this is Karan Juvekar on for Meta. Thanks for the question. I guess just generally how much variability are you seeing in the approaches that cloud vendors are taking? And when you're looking at the adoption of coherent at shorter distances, do you imagine some of that adoption will be highly variable by the cloud vendor?

Question: Karan Juvekar - Morgan Stanley - Analyst : Got it. Thank you.

Question: Tim Savageaux - Northland Capital Markets - Analyst : Hey, thanks a lot. Kind of want to go back to this Lumen TAM discussion and you've mentioned it a couple of times here in the slides. You know, if they're purchasing 10% of Corning's fiber capacity every year, that's, you know, more than $500 million. I wonder, you know, how you would view an equipment opportunity relative to that number. But I really wanted to get to a broader competitive discussion looming historically been a big infinera account. Clearly, the merger with Nokia may have competitive implications. They just announced what looks like a pretty big deal with [Coral Weve] that appears significant. So a couple of things on that maybe to go a little bit deeper on the TAM and you know other Lumen's out there, I think is the question most folks want to know and then how Ciena is positioned both specifically there and elsewhere? Given the changing competitive environment? Thanks.

Question: Tim Savageaux - Northland Capital Markets - Analyst : Great, thanks very much. Appreciate it.

Question: Adrienne Colby - Citigroup, Inc. - Analyst : Hi, it's Adrian for Atif. Thanks for taking the question. On the pluggables side, you mentioned having over 100 customers now for your 400 ZR zero plus solutions and the first 800 ZR win. I was hoping you could update us on the demand you're seeing for 400 ZR evolving with the availability of 800 ZR zero plus.

Question: Michael Genovese - Rosenblatt Securities - Analyst : Great. Thanks. I guess I have another timing question on this idea of more distributed data centers because the cluster sizes are getting bigger and I guess, you know, power restrictions and things like that so that we're going to get more data centers. And instead of having mega huge, massive ones will be still be huge, but there be more of them. And this idea that drive and accelerate the DCI market. Can you talk about basically what you're thinking there and the timing of that, is that something that we would see in '25? Is that more of a '26 event? What do you guys think?

Question: Michael Genovese - Rosenblatt Securities - Analyst : Okay. Thanks for that. And then my other question would be just, can you comment on your -- how you're thinking about your own supplier strategy or you know any changes you know that you have made recently and how those play into this discussion? Unidentified Company Representative You could you repeat that, I'm sorry, you cut out on my line. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 08, 2024 / 3:30PM, CIEN.N - Ciena Corp To Discuss Expanding Leadership in Optical A Q&A on Ciena Strategy for Growth in AI and Data Center Markets

Question: Michael Genovese - Rosenblatt Securities - Analyst : Thanks again.

Question: Cobb Sadler - Caramount Strategic Advisors - Analyst : Hey, guys, thanks a lot for taking the question. Just kind of 2,000 feet. How did, so, so you're talking about disaggregating your systems to, to a pretty granular level. You're selling, you're going to sell DSP's, you sell drivers. It sounds like you may license your technology. How did that, how did that come about? And I, I guess the, the is the answer, you do have a, you're at the three nanometer process, but it sounds like your competitors probably aren't. And so you do have some sort, you have, you have a large lead, 18 month plus lead per system. So do you think you might have the same sort of lead when you start selling DSD's or drivers versus the existing competition? Thanks a lot.

Question: Cobb Sadler - Caramount Strategic Advisors - Analyst : Got it, got it. But for, for example, if you're, if you're going to sell DSP's, I mean, do you have the sales infrastructure? Could you use your existing module sales infrastructure or you know, I'm I'm sure you'd be glad to scale as, as sales ramp. But you're, you're prepared, you're prepared for this, for this model. And I'm assuming what, what was the, what, what's the most recent catalyst and then come to call for the, for the conference call is the cloud providers are, are kind of pushing you to speed things up. And that, the question.

Question: Cobb Sadler - Caramount Strategic Advisors - Analyst : Okay, great. Thank you very much.

Question: Dave Kang - B. Riley Securities - Analyst : Thank you. Just one question regarding coherent pluggables versus LPO clearly, you're trying to you push your coherent pluggables into the data centers. Whereas other companies trying to push their LPO. What's your take on LPO? What would be a push back on LPO? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 08, 2024 / 3:30PM, CIEN.N - Ciena Corp To Discuss Expanding Leadership in Optical A Q&A on Ciena Strategy for Growth in AI and Data Center Markets

Question: Dave Kang - B. Riley Securities - Analyst : And.

Question: Dave Kang - B. Riley Securities - Analyst : Follow up to that. Yeah, earlier you talked about power, I guess. I'm hearing that like once you know, black wall as you go from a GP to like 72GPU si mean power is going to increase exponentially. So even current solutions, I mean that's going to be a big problem. So you said pluggable power will go down to the current transceivers. But then sounds like that may not be good enough that it needs to be go go beyond, lower than current transceivers can can coherent technology, get there. Is that possible?

Question: Dave Kang - B. Riley Securities - Analyst : And I have missed, I may have missed it. But then when do you say the time frame would be, would be like in the next two, three years?

Question: Dave Kang - B. Riley Securities - Analyst : '26 Got it. Thank you.