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Technology Stocks : Ciena (CIEN)

CIEN 238.36

-0.3%

Dec 30 4:00 PM EST

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To: Glenn D. Rudolph who wrote (1376)	2/21/1998 11:20:00 AM
From: craig crawford	Read Replies (2) of 12623

<< Isn't this colloquy eerily similar to those that occurred in September and October on the ASND thread? I think we may even have the same players involved. Gary, This is exactly the same which is why I am parking money here:-) Glenn >> I hate to disagree with my fellow CIEN lovers but I don't see too many similarities between A$ND's problems 6 months ago and CIEN's problems now. Perhaps you guys weren't referring to the actual events of the companies but the types of discussion about them? 1) A$ND had problems with their products first off. There is nothing wrong with CIEN's products. They have the best solution in service today. In fact CIEN's WDM solution works so well that WCOM has decided that they have plenty of bandwith for their network for the time being. (we will see how long that lasts). 2) A$ND was digesting a substantial purchase of C$CC which exacerbated their problems (Of course it was a fine move on A$ND's part but it did cause indigestion). CIEN is not going through any huge merger at this point. 3) There was substantial pricing pressures occuring in the remote access market at the time. CIEN isn't experiencing those kind of pricing pressures at this time. (No guarantees for the future though). 4) A$ND business was hurt due to the 56K standards war (which was all COMS fault). CIEN has no standards problems to deal with. 5) The last 10 points of A$ND's decline was mostly due to management credibility concerns and capitulation. We may see some capitualtion in CIEN but I don't think management has any credibility problems at this time. 6) Another factor hurting A$ND was Asian/Europian exposure. CIEN doesn't have those concerns because they have practicly no Asian exposure. Most of their business comes from WCOM and FON. CIEN does have a deal with Japan Telecom. To summarize, I would say that CIEN problems seem just like Cascades, not Ascend's. The only problem with Cascade was the extremely high level the stock was bid up to, and when they saw some lumpiness in their orders from telecom carriers they crashed. Of course it was only a temporary event and now C$CC (via A$ND) is back to selling switches like crazy. Same thing will happen to CIEN. AT&T will probably be the deciding factor for 1998. I know one firm in a research report estimates AT&T to spend $140 million on CIEN's products in 1998. That same firm speculated that if AT&T went with CIEN as their dominant supplier of choice that they could conceivably spend twice that amount. ($280 million). Of course Lucent will have something to say about that but AT&T will definitely spend millions on CIEN's WDM in 1998.

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