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WaveSmith Closes $30 Million Third Round

October 21, 2002 - Acton, MA

WaveSmith Networks, an emerging company focused on redefining multiservice switching for carriers, today announced that it has closed a $30 million third round of financing, bringing the company's total amount raised to $84.5 million. New investors in the round include Argonaut Private Equity and CIENA® Corporation (NASDAQ: CIEN). First and second round investors, Atlas Venture, Bessemer Venture Partners, Commonwealth Capital, and Fidelity Ventures, also participated in this latest round.

Also announced today, CIENA and WaveSmith have entered into a worldwide reseller agreement that gives CIENA the ability to market, sell, and support WaveSmith's Distributed Node (DN)™ multiservice switch product family into Tier One service provider accounts. CIENA will furnish first level 7x24 support for WaveSmith's products via its network of technical assistance centers. The partnership gives WaveSmith a worldwide sales presence and the ability to further penetrate the large carrier accounts.

“WaveSmith has a keen understanding of incumbent carrier requirements and has executed well on their product strategy,” said Steve Chaddick, CIENA's senior vice president and chief strategy officer. “WaveSmith has built a compelling solution for incumbent carriers at the network edge with unprecedented support of layer 2 services. As we have watched our industry unfold in these current economic times, carriers are looking to continue to deploy legacy services with future plans to migrate to MPLS.”

WaveSmith's latest round of financing will allow it to continue to scale sales, support and manufacturing, while at the same time grow the development team to continue to meet customer demands.

“WaveSmith is one of the few telecom equipment start-ups generating real revenues from carrier customers. We invested in WaveSmith because they have the right solution at the right time for service providers,” said Jason Martin, managing director of Argonaut Private Equity. “Landing a strategic partnership with CIENA and $30 million in financing indicates the quality of the products, strategy and team WaveSmith has put together.”

“The progress made by WaveSmith since their previous financing has been impressive. They've delivered the DN product family to market on schedule, secured revenue from customers, made significant progress with the RBOCs, and signed a critical partnership with CIENA,” said Rob Ketterson, managing partner of Fidelity Ventures. “WaveSmith's success as a start-up is built on the relative attractiveness of its market and the commitment of a deep management team to succeed over the long haul.”

“Today's announcement marks another significant milestone for WaveSmith. With a successful third round of financing and our partnership with CIENA, we have firmly placed ourselves in contention to gain significant market share from the incumbent multiservice switch vendors in both large and small carrier accounts,” said Robert Dalias, president and chief executive officer of WaveSmith Networks. “The fact that this round included both new and existing investors and that we attracted a partner of the caliber of CIENA is again further testament to the team we have and the product we've delivered to market.”