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

To: James Fulop who wrote (8987)	5/25/2000 4:21:00 PM
From: Rustam Tahir	Respond to of 12623

The only thing I was able to find from MSDW was their earnings analysis of 5/19/00: - Top and bottom lines beat our estimates Revenue of $185.7 MM grew 67% year over year, and EPS of $0.12 beat our estimate by 2 pennies. - Qwest delivered upside Qwest and (we believe) GTS together accounted for 63% of total revenue. Qwest bought metro and long haul transport products. - We are not concerned about customer concentration We believe that visibility over the next few quarters is excellent, and that Ciena continues to broaden its customer base. - CoreDirector on track CoreDirector, Ciena?s core optical switch, is on track. It is in trials with 7 carriers, up from 5 last quarter. Investment Summary and Conclusion: - Revenue jumped 67% year over year to $185.7 million, and topped our estimate by about $16 million. Gross margin was in line with our estimates, operating expenses were 250 basis points below our estimates, and EPS therefore came in at $0.12, beating our number by 2 cents. - The upside came from Qwest, which Ciena added as a metro and long haul customer for the first time this quarter. Qwest and GTS (we believe) together accounted for 63% of revenue, returning Ciena to high levels of customer concentration. Remember that a year earlier the top 2 customers accounted for 73% of revenue. But we are not worried. We believe that Ciena prioritized rapid shipments to Qwest to win the account, and that business with Qwest should remain robust for the next few quarters at least. Moreover, Ciena continues to add customers: it shipped to 22 customers this quarter, and its cumulative customer base reached 75. Over the next few quarters, we expect sales to Worldcom and Sprint to kick in again, and would not be surprised to see another major new customer. Overall, we think that Ciena has excellent visibility, and that lumpy orders from individual customers should combine into smoother revenue growth. - We like Ciena stock. CoreDirector is now in trials with 7 carriers, up from 5 last quarter. While President and CEO Pat Nettles cautioned that revenue from CoreDirector would be about $50 million for the calendar year, we believe his caution is due to uncertainty about the timing of revenue recognition rather than any doubts about the technology or the market for the switch. Bolstered by steadily growing revenues and earnings and positive announcements about core switching, we expect Ciena?s stock to continue to outperform the market and capture investor attention as a pure-play in optical networking. - We are raising our estimates for next quarter and fiscal 2001. We look for EPS estimate next quarter (FQ3) of $0.16 on revenue of $215 million, up from EPS of $0.15 on revenue of $195 million. For fiscal 2001, we now expect EPS of $1.02 on revenue of $1.161 billion, up from EPS of $0.95 on revenue of $1.045 billion. Fiscal Second Quarter Results - Revenue of $185.7 million, up 67% year over year, exceeded our estimate of $170.0 million by about 9 percent. There were two ten percent customers, and they accounted for 67% of revenue. Last quarter the top two customers accounted for 39.8% of revenue. We believe the top two customers this quarter were Qwest and GTS Group. Ciena shipped optical transport equipment to 22 customers, bringing the cumulative active customer total to 75. There were two important product developments in the quarter. First, shipments of systems and channel cards for CoreStream, Ciena?s newest generation transport system, overtook shipments of Sentry, the previous generation system. CoreStream offers more channels, higher speeds, and greater functionality that Sentry. Second, Ciena shipped 10 Gb/s channel cards in commercial quantities for the first time, to 3 customers. International revenues were 28.1% of the total. Metro DWDM systems have now shipped to at least 6 customers, including Iaxis, Cable & Wireless, Hansenet, Completel, MCI?s European operation, and Qwest. No revenue was recognized from CoreDirector and EdgeDirector.