9/21/98 Forbes 18A
1998 WL 12990029
Forbes
Copyright 1998 Forbes Inc.
Monday, September 21, 1998
Departments
Follow-Through
Follow Through
BY Peter Newcomb
Faulty connection
LAST YEAR WE WROTE glowingly about how Ciena Corp. had beaten giant
rivals like Lucent Technologies and France's Alcatel to market with gear
that crams huge amounts of information down fiber-optic lines (Oct. 6,
1997). However, Ciena got a nasty surprise last month when AT&T said it
would not order fiber-optic technology from the Linthicum, Md.-based
firm that has been a pioneer in the new field of photonics. The report
sent Ciena's market cap tumbling from $5.8 billion to $3.2 billion.
Among other things, this knocked the price of Ciena's pending merger
with network equipment maker Tellabs, Inc. down to $4.6 billion from
$7.1 billion.
The market, however, may have overreacted. BancAmerica Robertson
Stephens analyst Paul Silverstein notes that Ciena still makes the
biggest bandwidth-booster in actual use by carriers Sprint, Digital
Teleport and Belgium's Hermes Europe Railtel. The Ciena system zooms 100
billion bits of information per second, enough for about 1.4 million
simultaneous phone calls, down a single fiber. Similar equipment from
Lucent won't be available until 1999. Bell Atlantic is testing a new
Ciena system for local carriers.
Silverstein expects Ciena's revenue to climb 52% this fiscal year, to
$566 million, and 44% in 1999, to $817 million. Shrugs Ciena Chief
Executive Patrick Nettles: "We'll supply AT&T's competitors."
-TONI MACK
|
