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Technology Stocks : Ciena (CIEN) -- Ignore unavailable to you. Want to Upgrade?

To: SteveG who wrote (7824)	12/7/1999 2:44:00 PM
From: denni	Read Replies (1) \| Respond to of 12623

this is what i luv about the ciena thread. this is a quiet thread. peace & profits!

To: SteveG who wrote (7824)	12/8/1999 11:33:00 AM
From: SteveG	Read Replies (2) \| Respond to of 12623

from H&Q Lipton this am: Expect modest upside: Ciena reports Q4 results at 8:30 am EST this Friday (800-210-9006). We expect Ciena to continue its rebound and slightly exceed our $142M/0.03 estimate on both the top and bottom lines. We also believe gross margin will expand slightly beyond 41%. Upside is likely to be driven by further diversification of the Company's core DWDM customer base and progress with OC-192 and next-generation systems. We also look forward to encouraging updates especially for the CoreDirector product (Lightera), but also for EdgeDirector (Omnia). Holding its own in the core DWDM market: As we have heard in the Lucent ($80.14, LU, B), Nortel ($84.13, NT, MP), and Sycamore ($240.44, SCMR, NR) conference calls, as well as from component suppliers JDS Uniphase ($254.44, JDSU, B) and SDLI ($198.50, SDLI, B), the optical equipment market continues to roll along with remarkable strength and increasing diversification. We believe Ciena will echo the same sentiments, and is likely to better last quarter's record of 18 customers. As far as market share goes, according to an RHK study, the Company's share has eased from 20% in 1998 to 14% in 1999. While Ciena clearly has lost some share - in-line with our expectation – with an expanding DWDM supplier base, keep in mind that the RHK study may have overweighted Nortel's share to some extent because Nortel's SONET ADMs are integrated with its DWDM gear, and the company's DWDM revenue includes an element of SONET gear. One of the factors that is a central element of Ciena's resiliency in the DWDM market is the Company's ability to introduce and manufacture new features and products. To that end, we believe OC-192 channels are selling as fast as the Company can make them. Also, to meet the needs of next-generation, ultra long-haul networks with full optical functionality, Ciena has announced its high-density, ultra long-haul transport system that is similar in vision to Corvis' and Qtera's products, as well as Lucent's long-standing efforts to commercialize dispersion managed soliton systems. Overall, despite increasing competition and some element of competitive noise, we view Ciena as one of the few companies with proven optical technology and manufacturing capabilities. CoreDirector gaining traction: Although the Williams/CoreDirector announcement may have been on the early side, we believe Williams ($27.25, WCG, NR) is committed to this product and should spend well in excess of the $40M mentioned in the press release over the next few years. We believe Ciena is among the leaders both in terms of architecture and product availability in this segment of the market, which is populated by new and emerging competitive solutions from Cisco (Monterey) ($98.25, CSCO, B), Sycamore, and Tellium. We believe CoreDirector interest is high and the Company is trialing its CoreDirector systems with MCI WorldCom ($78.94, WCOM, NR) and Qwest ($35.75, QWST, NR), which could potentially materialize as customers in 1H:00. Despite recent run up, valuation still attractive: We remain surprised that Ciena only recently has begun to approach the valuation of almost anything else with the term “optical” in its business plan, especially considering the Company's position as a DWDM innovator and the potential of its emerging product lines, especially the CoreDirector. We reiterate our BUY recommendation on CIEN shares and expect solid Q4 results.