While NT's announcement will surely hurt the group, investor's may finally start realizing that not all segments of this market are slowing so dramatically. Something that has been talked about around here for a while.
I even noticed the fiber optics basher Scott Moritz is saying the same thing --- finally. In discussing the differences between CIEN and NT, he writes:
thestreet.com
The thread tying the events together is the so-called optical revolution in networking equipment. Ciena is the leader among companies focusing purely on optical networking, a leading-edge protocol that uses lightwaves to haul information over fiber optic pathways, and has gained significant headway in sales to optical buyers. Nortel, meanwhile, sells optical gear along with traditional telephone gear, the electronic, voice-based equipment that networks have sought to replace with optical systems that carry voice and data traffic on the same pathway. And weakness in that so-called legacy business has punished Nortel the most in its current quarter, it appears. . . .
Meanwhile, all was sweetness and light in Ciena's camp. Ciena's president and chief operating officer, Gary Smith, said in an interview after the company's conference call that the ill winds that blow across the sector are actually at Ciena's back.
"We've long talked about a shift from legacy [old electronic-based phone gear] to new optical data networks," said Smith. "And while we certainly aren't immune from the impact" of larger economic and network equipment spending slowdowns, "because of our product portfolio, we are beneficiaries, in a perverse way," of that shift in spending.
Speaking to a related issue, Nortel Chief Operating Officer Clarence Chandran was asked if Ciena was taking optical market share away from Nortel. Chandran said no. But investors will surely draw their own conclusions.
I'm not going to go back and find Mortiz's negative comments on the fiber optics sector, but leave it to say there appears to be a new tone in his writing as of today.
Pat |
