Why we are short CIEN and will add to our position into any strength...
ADCT admitted the obvious: "http://www.thestreet.com/_yahoo/tech/networking/1265141.html"
Look at the CLEC’s : finance.yahoo.com
They fell off the table so it was obvious that the growth models of the CIEN, NT, JDSU’s of the world were way overvalued:
NT:
Shorted July 26, 2000
clearstation.com
Covered Jan 3. 2000
Went long that stock due to NT is a good company and has an important global presence especially South America…rebound in S. America is underway...
JDSU:
Sold July 25, 2000
clearstation.com;
Covered Jan 3. 2001
Will not reenter that stock.
We were able to cover the NT short just before the announcement due to the unusual strength in the telecoms...WCOM and T...
We fully expected the rate cut by Alan Greenspan posted December 27, 2000:
messages.yahoo.com
It was confirmed January 3, 2000
From the post December 3. 2000:
“”””Greenspan above all else is a banker.
Because of the ridiculous pricing of equities in the last year forward looking projections were out of whack. The projections though technically sound were not fiscally responsible. Our banks (not unlike Japan's in the late 80's) overextended their lending based on these growth models. Since the capital markets were so liquid companies were able to issue bonds and generate debt to fuel their growth expectations. Because so many companies were doing the same thing at the same time prices were over inflated. T is a great example of this as is AMZN and JDSU (JDSU is still a solid short). The loss in equity value has cause a severe dry up of liquidity that may force even profitable companies into bankruptcy. The liquidity crisis is similar to that which Japan has dealt with the last decade BUT the reasons are far different.
Given the current state of liquidity IMO there will be some major failures in the next 60 days without a credit easing. Because Mr Greenspan and his group have orchestrated the entire crisis I suspect that they will come to the rescue before BAC and others face CH11.
The read deal is this though. Lawrence Summers in our opinion is a dangerous fed official because his bookish knowledge of financials is limited to rear view numbers and not sentiment and emotion (the 2 most important parts of capital markets). Because Summers and his camp are entrenched in the non easing of monetary policy due to inflation fears I fully expect Mr. Greenspan himself to cut rates by as much as 50 basis points BEFORE the next meeting. Given his position as chief he has the authority to act autonomously between meetings.””””
Since the dryup of liquidity was so pronounced plans that are out for the next six months have already been lowered in our opinion...
Recently SOME of the CLECs have gotten additional financing...ADLAC got some additional financing so there may be some players worth looking at in the CLEC business…I like RCNC because they already warned and have plenty of cash already so you won’t get diluted…But there is till expected to be a dramatic thinning out of that sector in the next year...
"Credit rating agency Moody's Investors Service expects the default rate to hit a 10-year high this year, with as many as 450 U.S. and Canadian companies succumbing.
Yet some experts don't think credits are falling enough to prevent junk bonds from providing investors with solid, double-digit total returns in 2001." dailynews.yahoo.com
What we see is a twofold issue...Higher risk higher reward...As fringe companies do fail to survive in the possible credit crunch of the future companies that are well funded and solid will be able to increase margins as failed competition wanes...But due to the slowdown, pricing pressures will be put on fiber optic providers thus lowering their bottom line and possibly limiting their growth as well...
As for the January 31, 2001 meeting we feel that Lawrence Summers and his clan will not allow at rate cut of more than 25BP...They are still smarting from the election of George W. Bush and we feel that Alan Greenspan does not have a quorum in that group since the exodus of Bob Rubin...
The fiber optic companies will go lower just like the dot com bubble but there will be some survivors…
Remember how the chips got overpriced?
messages.yahoo.com
Here is the chart: "http://finance.yahoo.com/q?s=^SOXX&d=1y"
The CLECs are already worried and did not have a good week last week, it is our opinion that CIEN is about to have the pins fall out any day...
finance.yahoo.com
Due to CIENs tremendous exposure to CLECs and their capital spending we feel that the stock is outrageously overprices and set for an incredible fall...In our opinion even with perfect conditions that stock cannot maintain its overly bloated market cap...In our opinion the conditions are far from ideal in their market!!!
Voluntary Disclosure:
Short CIEN
smallcapmaven/ assassino_del_maiale |
