Dave and thread,
Today, the combination of TLAB and CIEN lost a combined market capitalization in excess of $4.3 billion. The question is whether this is justified. Clearly, the earnings shortfall doesn't account for this drop. Panic selling is saying that the loss of a large account represents a permanent setback to the combination. I don't believe that to be the case.
I am not an engineer. But from the many posts on this thread, I am convinced that there is a tremendous future in optical networking. I believe that was the motivating factor behind the combination. It was the technology that motivated the merger, not current sales.
That being the case, the technology is no less valuable because of the loss of a sale to a large company. It simply underscores the vulnerability of a small, emerging technology company. The combination with TLAB allows the technology to incubate and mature. It removes the pressure to award significant price concessions to a large customer because it provides the financial umbrella that allows the company a degree of independence that it would not enjoy as a stand-alone entity.
It may take a few quarters, but if the assessment of the engineering experts on this thread is correct then the reaction of the marketplace was clearly incorrect.
Yes, I'm upset at the huge paper loss I suffered today. But I am an investor, not a trader. That means that my eyes are on the long term time horizon. I believe that five years from now what happened yesterday will be a non-event.
TTFN,
CTC |
