t36,
Fundamentally, I believe you are correct that Ciena's last earnings cc was not exactly a thing of beauty, and it certainly shouldn't set fire to the stock. However, I don't think fundamentals are driving Ciena trading right now.
Recall that Ciena IPO'd way high (30's or 40's if I rememeber correctly), and went up from there. Wall street loved Ciena, and thought it was a big part of the telecom boom. Well, when the TLAB deal fell through there was a glaring accusation that Ciena was a one-trick pony. That is, their revenues were way to concentrated on way to few customers. Then they were losing bids and the loyalty of the few customers that they had was called into question (like sprint).
Valid or not, that clearly left a lingering cloud of uncertainty hanging over Ciena. Needless to say, Ciena wilted and weakened all the way down into the single digits. Talk about overdone!
Well, to make a long story short, Ciena has clearly taken some initial steps to broaden their customer base, and prove their viability. Emphasis here is on "intial steps". This seems to be enough for the fund managers to start piling back into Ciena at the moment, though. After all, if Ciena could possibly make it alone, then who knows how high the share price could go before they get taken out, which make no mistake about it, is THE end goal of current Ciena management. They will eventually merge. Only question is when & how much.
My take only,
John Dodson |
