David Huber: The Joy of Seeing the Vision Through

Posted: 10/2000

David Huber: The Joy of Seeing the Vision Through
By Ken Branson

The vision of an all-optical network, unaided and unencumbered by electronics, did not originate with David Huber. But he’s held on to it for an awfully long time–since he finished graduate school at Brigham Young University more than 20 years ago.

Huber helped bring the vision closer with his pioneering work in DWDM technology, and by founding Ciena Corp. and Corvis Corp., companies that have put the technology to use.

The concept is simple: information (voice, data, images) traveling on waves of light; sophisticated hardware switching the light to the right place; sophisticated software managing the hardware that switches the light.

Of course, to quote Tom Hanks’ character in A League of Their Own, “If it were easy, everybody would do it.”

Indeed, Ciena might have done it if Huber’s colleagues there had agreed that it was the right thing to do. In 1997, Huber tried to convince them that Ciena should get into all-optical switching. They didn’t see it Huber’s way, and he left.

It was the classic corporate picture: visionary can’t make his colleagues see his vision, quits, convinces a venture capitalist that he’s on to something, and starts his own company.

The difference in Huber’s case, however, is that Huber had $200 million in Ciena stock, which allowed him to skip the venture capitalists.

Apparently, it never occurred to Huber to rest a while.

“I’ve been in this business for 20 years,” he says. “I’m in it because I love it. I didn’t have to work after Ciena, but I get a lot of joy out of creating a vision and seeing it through. The joy I get is from being there first, developing new products.”

Corvis has four hardware and four software products. The company says the Corvis Optical Routing Switch is the “first all-optical switch that routes optical signals at multiple fiber network connections.” The Optical Network Gateway is an all-optical network interface that transports data as optical signals.

Taken together, those products make it possible for Corvis’ customers to send optical signals 3,200 kilometers (km) without an amplifier. Corvis makes the Optical Amplifier, which boosts the signal for the next 3,200 km.

Huber says he thinks of the Optical Add Drop Multiplexer as a switch for “cities that are not a major network site.” The software products are all part of the CorManager suite.

“There’s network management software, and then there’s WavePlanner, one of the intelligent optical parts,” Huber says. “Carriers put their traffic requirements into the tool. It tells them what equipment they need in the net and where to put it. Then the provisioning tool actually brings up the service–that’s the intelligent part of the network. Then there’s the Corvis element interface, which is really how you … check the health of the equipment.”

Corvis has had a run of customer wins this year. In April, it agreed to supply its entire suite of products to Williams Communications Group Inc.
(www.williamscommunications.com), a deal potentially worth $200 million.

In May, Broadwing Communications, a wholly owned subsidiary of Broadwing Inc.
(www.broadwing.com), became the first customer to actually deploy the suite in a $200 million deal.

Finally, in June, Qwest Communications International Inc.
(www.qwest.com) announced it had picked Corvis to supply its products for Qwest’s pending all-optical network.

In the meantime, Corvis went public at $36 per share at the end of July and shot up to $95 on the first day. In early August, the stock rose to $114 ³/4 before settling down in the mid-80s in mid-August. The IPO raised about $1 billion. Even with the up-and-down track of technology stocks during the summer, analysts seemed to be betting on Corvis as the right optical horse.

“The all-optical solution re-defines network cost, scalability, flexibility and creates incremental revenue opportunities for its customers,” wrote Jim
Parmalee, technology analyst at Credit Suisse First Boston Corp. (www.csfb.com) in giving the stock a “strong buy” rating in August. “Further, we believe that component suppliers view Corvis as a strategic emerging systems company which will assist in easing potential supply constraints.”

While Huber may like being first, he knows he won’t be alone for very long.

“Clearly, Nortel [Networks Corp.,
www.nortelnetworks.com] is the most formidable competitor,” he says. “There are other companies in the space, but when you look at what people are actually selling, they’re the clear leader.”

Nortel enhanced its competitiveness with its December 1999 purchase of Qtera Corp.
(www.qtera.com), whose managers claim they have an all-optical technology that can boost a signal 4,000 km before it needs amplification.

In addition to Nortel, Huber’s old friends at Ciena are in the game, offering optical networking and transport products and what the company describes as “intelligent switching.”

Huber thinks Corvis is ready for all comers, however, and believes it can deliver an all-optical network. “Other companies are promising similar equipment, but they’re not there yet. Our ability to deliver is the key. In terms of the optical transport at 3,200 km, nobody has delivered but us. And we’ll be the first to deliver an optical switch this year.” he says.

Before it went public, Corvis did some buying of its own. In May, it bought Algety Telecom, a privately held company that makes terabit capacity long-haul transmission systems; and, in June, Corvis bought Baylight Networks, which builds optical network access systems and subsystems.

Corvis didn’t disclose how much it spent on the companies–the Algety deal was in stock–but it clearly made the deals for the intellectual property the two companies possessed, and for the intellects that produced that property.

In its second quarter earnings statement, Corvis says it spent $40.3 million in
research and development (R&D) as part of the acquisitions.

That spending pushed Corvis’ net loss for the quarter to $100.7 million, up from a $14.3 million loss in the same quarter last year. The company reported no revenue during the second quarter. The first revenue from the Williams, Broadwing and Qwest deals will be reported this quarter, the company says.

Huber’s adventures in optical communications have made him a rich man by anyone’s estimation, but even rich men can be tempted to sell their startups to richer men.

As Paul Newman’s partner tells him in The Verdict: “You won! You won! When they give you the money, that’s when you win!”

Broadwing, in addition to buying
Corvis’ products, has decided it likes what it sees in the young company and has invested $44 million in it. And Cisco Systems Inc.
(www.cisco.com), which keeps asking us if we’re going to be ready for the Internet, has decided to be ready for an optical world; it owns about 10 percent of
Corvis.

All this has stirred the rumor pot considerably. Rumors have been floating around that Cisco already has made a formal offer to buy Corvis. Huber sidesteps that question.

“This is the business I’m in,” he says. “We’re happy with the way things are
going. We enjoy our independence and welcome a challenge.”

Ken Branson is the business and financial editor for PHONE+ magazine.

David Huber