Craig, after making the post I checked back on the price of CIEN pre-merger, and you are of course correct -- it was around $50. I apologize for this misstatement.
My friend, it seems as if you and I are dancing around this issue. I have always contended that the purchase of CIEN was basically a technology issue. As you recall, my misgivings were based on Ciena's credibility as underscored by the NY Times article. I still think that's an issue.
But, if Ciena's technology is that important to the future of TLAB the deal will go through (although significantly modifies). The difference is that the blue sky aspects will be stripped away, and the focus will be on the technology rather than on Ciena's book of existing business.
As to your point behind the value of the technology, who's to say? The market is currently telling us that with its projected earnings of say $.15 for the quarter the value of the company is around $3.2 billion, and at that it is sporting a hefty trailing p/e. Ciena's short term prospects as a stand alone company do not look particularly bright. It has a small customer base and limited product offerings which makes it extremely vulnerable to the loss of just one or two customers and product obsolescence.
I point to the last comment you made:
losing a $100 million+ order is not a small thing.
Well, in the over all scheme of things I think it is a small thing. Look at it this way. The gross profit on the deal would be roughly $50 million, and the after-tax earnings would be roughly $35 million. As a single event, so what? But if this is an indication of how customers view Ciena's technology, it is a very big thing indeed!
The crux of the matter is, as both of us now believe:
It's the credibility factor that bothers me most. At the present time Ciena management cannot be relied upon in my eyes.
So let me ask you this: do you, as a TLAB s/h believe the deal should go through, and at what price?
TTFN,
CTC |
