(Update2) Sycamore Networks Up; Analyst Says Spending on
Target
By Scott Lanman
quote.bloomberg.com
Chelmsford, Massachusetts, April 28 (Bloomberg) -- Shares of
Sycamore Networks Inc., a maker of fiber-optic equipment, rose 21
percent after an analyst said customer spending remains on target
and the stock is undervalued.
The shares rose 13 7/16 to 78 1/2, their third-biggest one-
day percentage gain. Still, the shares are down 61 percent from a
March 2 high of 199 1/2.
J.P. Morgan Securities Inc.'s Greg Geiling, who was named a
top telephone-equipment analyst last year by Institutional
Investor magazine, said in a research note that the stock market's
recent decline is a ``buying opportunity'' for Sycamore and Ciena
Corp. Speculation about software glitches and failed tests of
Sycamore gear appears to be unfounded, he wrote.
``(W)e firmly believe that product trials are proceeding very
smoothly, and customer-spending forecasts remain intact,'' Geiling
wrote.
Over the past few months, Sycamore has unveiled agreements to
sell its equipment to companies other than Williams Communications
Group Inc. Williams has accounted for ``substantially all'' of
Sycamore's revenue so far, according to Sycamore's quarterly
regulatory filing last month, and Williams bought a stake in the
company last year.
Earnings Estimates
Last November, Sycamore said Williams agreed to buy $400
million of Sycamore gear over four years.
In January, Enron Corp., an energy trading company that's
building a fiber-optic network, said it will buy as much as $200
million of Sycamore equipment over three years. Last month, Storm
Telecommunications Ltd. said it will spend as much as $40 million
on Sycamore gear.
Geiling expects that Sycamore will report profit of 2 cents a
share in its fiscal third quarter ending in April. His estimate is
also the average of six analysts polled by First Call/Thomson
Financial. Revenue is expected to rise to $39.2 million, 35
percent higher than the prior quarter, he wrote.
J.P. Morgan was an underwriter for Chelmsford, Massachusetts-
based Sycamore's initial public share sale in October.
Geiling also reiterated his ``buy'' rating on Ciena, which
makes equipment to boost the capacity of fiber-optic networks. The
Linthicum, Maryland-based company's shares fell 13/16 to 123 5/8. |
