<<Would someone from each company please explain>>
I'm not from any of the companies, but I'll crawl out of my hole and
take a weak shot at it.
Take a look at CIEN 10Q, with all of the uncertainty in the stock,
management took the time to go out and talk to customers, then
discussed at length some of the issues facing the company
and the industry as a whole.
If I remember correctly, his bottom line is that it's dog-eat-dog
right now. First, other than the US, growth in much of the rest
of the world has stopped. Even here, major customers are
adopting more of a just-in-time attitude toward network build out,
instead of building two+ years ahead they are only building out for
one years growth. Also, with all of the consolidation going on,
Worldcom+MCI, Baby Bell marriages, and others, much capital spending
has been slowed.
So, with reduced spending, instead of those wonderful 50%+ gross margins
they were all getting, some competitors are actually settling for
40% now and those that don't (Ciena recently) don't get the orders that
are there. Reduced margins don't bode well for bottom line growth
necessary to maintain a p/e of 40.
I even heard that Lucent CEO told analysts on conference call that the
analyst's growth expectations were quite high. But aren't they always?
Just my take on what two industry participants said.
With that said, the stocks are now free to resume their upward climb.
Yo Yo |
