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Technology Stocks : Ciena (CIEN)

CIEN 253.53

-1.5%

Jan 29 4:00 PM EST

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To: James Fulop who wrote (9460)	8/17/2000 11:16:31 AM
From: peggylynn	Read Replies (2) of 12623

Some rough notes and impressions from the CC - I have a Mac so can't listen to the replay to make corrections so my notes might not be accurate. Also, I missed the first 16 minutes. I thought future guidance from the company sounded both conservative but extremely confident. CIEN sounded like a maturing company clearly in control of its own destiny. My guess is that institutions and analysts will like what they heard will be considering CIEN a much less speculative investment. CIEN having a full product portfolio rather than a single product and becoming a part of their customer's strategic planning is a competitive advantage. NT remains CIEN's only significant competitor. I got the impression that, increasingly, customers do not want contract wins announced for competitive reasons so I imagine we will see less and less in the way of new announcements for wins in the future. - peggylynn Core Stream to ship late this year Core Director - Currently being used to head end back-haul 200-256 and replacing cross-connect to mesh - replacing SONET - Metro access 10Gg E significant factor - Complexity will grow - 10 customers - Recognized revs this Q from only 3 of the 10 customers - 10g E will ship late Q42000/early Q12001 Core Director Core Director CI significant contributor Competitors Tellium, Nortel, Monterrey (not so much any more) - Nortel major threat - no further mention of Tellium in CC. Mfg. expansion - ongoing - have scaled 60% people - strategic partner relationships with customers strengthening and helps to stay ahead of channel race CIEN is now further out on R&D Sprint/WCOM possible orders - breakup neutral - Sprint good customer - will continue to be one. Timetable for product rollouts are scheduled on the basis of being competitive within overall market evolution. Driver is order in which customers want product rather than technology. Difference between Corvis, NT, others -- displacing old granularity down to STS-1 Opportunity for layered approach with electronic component with Core Director Corvis is restoration product - simpler product. Europe and Asia strong. Growing #1 market share Europe. 31%??? growth in global sales. 31% growth in Europe. Transparent optical switch is technology driven - not market driven (not said here but "hype" versus shipping real product was mentioned a couple of times) Core Director margins - higher gross margins than transport but CIEN will not talk specifics to help prevent customers from haggling. Core Director/Core director CI product mix - 3 existing customers will order when CI when available late this year/next year in addition to regular Core Director - complete system solution More unannounced customers one of which is 1 10%+ customer. This should make up for lumpiness in current 10%+ customer orders. If NT would provide more ADM's CIEN could sell even more equipment. Seen SCMR only in 2? accounts - not globally Got around component shortages - confident can manage risk Core Director - Timing on SDS-1 layer - available now Can scale to customer demand - decentralized - port size a non-issue - 10 customers - NT is main competitor - 2 accounts ONIS Williams - Core Director going fine and on track. Core Director - $50M - Goal is achievable - not in projections? - good customer acceptance Inventory - last quarter too heavy - fixed this quarter to stay within CIEN's model and should stay that way. CIEN is now a part of customers' of strategic planning which helps with inventory control. Broader customer base and broader product portfolio help with earnings visibility. CIEN will not break out by product line. Metro slightly less than 10% of sales. Customers going with vendors that can deliver - dual vendors on transport - single vendor on switching - CIEN can deliver both product and functionality Seeing a lot of competitors offer financial incentives. CIEN does not do this and will continue to win on the basis of added value to customer in their product line to win. Technology - On Center software - Service level independent of equipment. Will support customer provisioning and ????. Will talk to Gina Sokolow about specific services after conference call. Core Director - RBOC's - longer sales cycle - maybe orders before 12 months, deploy network-wide. Current sales mostly to IXC's - intelligence supports ring and mesh NT and ONIS (2 accounts) in metro as competitors. Customers now consider CIEN a strategic partner - Customers do not want competitors to know what they have ordered - Helps CIEN to do a better job with managing manufacturing capability and timing of product rollouts

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