NEW YORK, July 30 (Reuters) - Shares of CIENA Corp.
(NASDAQ:CIEN) fell more than 3 percent in heavy trading Thursday
after the telecommunications equipment company said AT&T Corp.
(NYSE:T) had changed the specifications for a type of equipment it
may buy, analysts said.
CIENA hit an intraday low of 74-3/4 but recovered slightly
to 77-3/4, down 2-11/16.
CIENA spokesman Denny Bilter said AT&T is looking for a
more powerful global optic networking system than the CIENA
product it had been testing. CIENA first disclosed the
information in a filing with the Securities and Exchange
Commission.
AT&T had been testing CIENA'a 16-channel dense wavelength
division multiplexing (DWDM) system. DWDM is a method of
increasing the capacity of fiber optic phone lines and data
networks.
"AT&T recently indicated that their capacity requirements
have grown to such an extent that they will not be deploying
16-channel. They will shift to an accelerated evaluation of
higher-channel systems," Bilter said.
"We believe AT&T will evaluate our 40-channel system, and
we believe we are the only supplier with a 40-channel that is
commercially available," he said.
"Over the short term, it means...we won't be receiving
income for the fourth quarter" from sales to AT&T of a
16-channel system, Bilter said.
The change in AT&T's needs could delay the timing of
potential contracts or give another company the chance to
develop a 40-channel product, analysts said.
Michael Neiberg, a telecommunications equipment analyst
with Furman Selz, said, "The only company with a 40-channel
system is CIENA. But the change is some additional
uncertainty...there's been a change in what is going on with
AT&T. And is the change for the better or the worse? It's too
early to tell."
CIENA expects AT&T to decide soon what its equipment needs
are.
Earlier this year a CIENA rival, Lucent Technologies Inc.
(NYSE:LU), unveiled an 80-channel system called WaveStar OLS 400G.
At that time, AT&T said it needed both 16- and 80-channel
systems.
Now, analysts suggest, AT&T may select a 40-channel product
and an 80-channel product.
AT&T declined to comment on its equipment needs.
"Back in January we said we would be future-proofing our
network," said AT&T spokeswoman Ruthlyn Newell. "Among the
things we cited was wave division multiplexing...and that we
would be moving toward an 80-wavelength (-channel) system and
testing it by the end of this year."
She added, "This particular technology is leapfrogging and
expanding rapidly...we continuously communicate to our
suppliers our technology needs."
AT&T said it will "engineer its network as it makes sense"
and may not put the same type of DWDM technology in all parts.
Rural areas, for example, may not need as much capacity as
cities.
Lucent shares were up 3-13/16 to 92-15/16.
In June CIENA agreed to be acquired by Tellabs Inc.
(NASDAQ:TLAB) for $7.1 billion. Bilter said Tellabs has not made any
statements regarding earnings projections for the combined
company.
Copyright 1998, Reuters News Service |
