From Sectorplay.com
Ciena
Submitted by Steve Chand
May 27, 2000.
CIENA was established in 1992 and had its IPO in February 1997. It is based in Linthicum, Maryland. It services its customers in Europe, Asia and the Americas from locally staffed offices around the world. It recently announced that it has opened CIENA Brazil Limitada in Sao Paulo to meet the demands in one of the fastest growing telecommunication market. RHK, a market research company, announced that CIENA has captured 35% European market share in the intelligent optical networks and that its share of the market is higher than any other supplier.
CIENA is the market leader in optical networking systems, providing solutions for both voice and data communications based network architectures. The company offers a comprehensive portfolio of products, including dense wavelength division multiplexing (DWDM) optical transport, intelligent switching and distribution technologies that enable carriers to easily deliver multiple services. The company offers products for Tele and data communication service providers world wide.
CIENA's list of products include MultiWave Core Director, MultiWave Core Stream, MultiWave Sentry, MultiWave Metro, MultiWave Firefly, MultiWave Optical Line Amplifier, MultiWave Sentry Optical Add/Drop Multiplexer, MultiWave Edge Director Wave Watcher System and Direct Connect Application Note. These products enable carriers and the service providers to provision, manage and deliver high bandwidth services to their customers. These products drastically simplifies the network and reduces the cost to operate it. For example, MultiWave Edge Director lowers the cost of delivering the services by freeing up bandwidth and fiber access and reduces operational and overhead expenses.
CIENA customers include Bell Atlantic, Bell South, Cable & Wireless USA, Cable & Wireless, PSI Net, Qwest Communications, Sprint, MCI world com, Japan Telecom, Esat telecom and many more blue-chip companies. This list of blue-chip customers is expanding everyday due to CIENA's industry leading technology and customer focus delivery.
CIENA has been making some strategic alliances. On April 20, 2000, CIENA and Juniper Networks announced a 10Gbps optical and IP network platforms, delivering pure 10G IP service over the glass. This next generation broadband network is essential for enabling e-commerce platform providers to be able to effectively deliver the net-computing capability that is needed to meet the scalability demands. This strategic alliance with industry leading Internet backbone router manufacturer, Juniper Networks, is essential in meeting the scalability demands of carriers and service providers. This alliance should provide the framework to cooperate in developing many new network innovations for the future.
The outlook for CIENA is exceedingly bright. In its most recent quarter, the company reported earnings of $.12 per share. This is up from break-even results a year ago and doubling the previous quarter's EPS. The revenue was up 66% from year ago and 20% from previous quarter This is a clear indication that there is brisk demand for CIENA's products and services. The gross margin for this quarter was 49% versus 43% for the previous quarter. The increase in gross margin indicates that there is very little if any pressure on the price it charges to its customers for its products.
The past misadventure of taking over Tell Labs seemed to have subsided and the company is seemed to be making a very good progress towards sustainable profitability and executing its business plan. This company is in the very hot optical network market and the future looks very bright. The stock price is very volatile and has very expensive multiples, may be deservingly so because of the bright future. This stock is not for the faint heart but should serve well its long-term holders. |
