Your points are well-taken. I for one do not accept 87% growth at face-value. However, I thought it best to use the numbers out there, the numbers that others are using.
I listened to the LU conference call today - a somber one indeed. The "creative destruction" phase you spoke about is already happening. I believe Lucent is an example.
I am not starry-eyed about Ciena (especially not after the year I have had with QCOM <nsvbg>). However, this is a growth industry and Ciena seems to be well-positioned in it. They look to me as if they have transformed themselves this year (in reality maybe, but more certainly in terms of the market's perception) from a niche-player whose best prospects for its stock price was to be a take-over target, into a major player in one of fastest growing industries now and looking forward over the foreseeable future.
About this latter point and your comment: "There's literally not enough end-user bucks around to pay for it if you extrapolate the industry's current growth out a few years." It made me think back to something I heard 18 months ago at a dinner I attended where the after dinner speaker was one of the founders of venture capital. He was relating a dinner conversation he had just had with someone far more knowledgeable than he. (Actually he described it as a monologue, because he said when this person - who he did not identify - speaks, you shut up and listen.) What this person said was that the upcoming communications-era would create far more wealth than that which was created by the computer networking era of the previous ten years. In fact, I believe he used words to the effect that it would be an order of magnitude greater. And we all know the wealth that has been created by the networking era - companies like msft, csco, etc.
All this being said, the toughest part of investing I am finding is letting go of a winner; that is, not falling in love with it such that when its fundamentals change you a blinded by your "loyalty and love". |
