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Strategies & Market Trends : Technical analysis for shorts & longs

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Nov 14 4:00 PM EST

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To: Johnny Canuck who wrote (36481)	3/18/2002 10:02:28 PM
From: Johnny Canuck	Read Replies (1) of 68046

ONIS Rev miss, CC notes After Hours Monday : A mixed bias is evident in after hours trade with the Nasdaq slightly underperforming amid warnings and earnings misses. ONI Systems (ONIS -5.9%) announced it expects Q1 revenues in the range of $18-$24 mln vs the consensus of $39.5 mln; sees net loss in the range of $0.24-$0.27 per share vs the consensus for a net loss of $0.18 per share. Company in the process of being acquired and according to the press release the merger is still on but Ciena (CIEN -5%), which is doing the acquisition, is also under pressure. EXFO ( (-4.4%) reported in line for Q2 but issued a warning for Q3. Targets sales of $14.5-$17.0 mln and a pro forma net loss of $0.05-$0.07 vs ests of $17.6 mln and a loss of $0.05. [Harry: We have a serious problem in the telecom sector. In the ONIS call, they mentioned that they expected maintance levels would have been $40 mil this Q. But today they are announcing 18 to 24 mil in rev for the Q due to cap ex push outs. Some customers are dealing with bankruptcy issues, some are dealing with quality of fiber issues in rings and some are waiting for capacity utilization to justify bring on more capacity. I expected this Q to be bad in general for the telecom equipment sector as demand as the retail level has been weak except for very basic services locally. But the ONIS call suggests the rock bottom levels of spending have essentially been cut in half. That means carriers are delaying spending till they actually see a recovery in the 2H. Given this scenario the worst case expectation for this Q and next Q are not low enough. For companies like JNPR who have heavy institutional support at the magic $10 level, it means they can now realistic break below the level. I did not expect much movement in stocks like JNPR till the July time frame. I would expect a new down trend to start now. ONIS is seeing more trial activity in Europe than the rest of the world but it is not translating into sales. Slow down is world wide, no region is weaker than others. ONIS has very little sales in Asia, but what little there is is seeing aggressive pricing. Now loss of sales to competitors. No pressure on ASP's above normal. Management sounded truly surprised at the rev miss. They are announcing the miss earlier than usually because of the merge and the need to disclose. Still two weeks left in the Q.]

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