Ibexx,
I definitely respect your opinions, but I disagree with you on this one (nonetheless I agree with you that CIEN calls are the only way to play this, although I thought November would be a better time due to the shareholders meeting; the market could take a premium out of CIEN right up until then, and I can't see the company's fundamentals improving before then).
CIEN is in free fall for good reason: they've already warned for this quarter and they're still losing major contracts that analysts have built into future earnings. So what are they worth? I don't know, and it's probably anyone's guess, so here's mine: We know they're going to earn .13-.15 this quarter; will they do better, worse or the same in future quarters? I'm going to go with the status quo and bet they'll stay in that range for a while. So I'll give them a forward PE of 25 until their business picture clears up and assign them a fair value of about $13-$15. They'll probably trade higher than that due to the buyout premium, and the fact that CSCO is probably waiting in the wings should the deal fall through entirely (would CSCO pay as much as TLAB? I certainly hope not). And until the shareholders vote, the deal is in jeopardy. So the market's trepidation is justified, IMHO, but as I don't have a stake in this deal except for my long positions in LU and CSCO, I will gladly listen to other arguments.
Paul
P.S. I might wait a while to buy the options, at least until 3:58 if you're a fast trader; the way they're going they'll probably sell right up into the close and then gap up tomorrow (again, IMHO). |
