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To: James Fulop who wrote (999)	11/19/2000 8:05:09 AM
From: John Carragher	Respond to of 1805

RE: cien from bull market report. RUMOR CENTRAL: CISCO TO BUY CIENA? COMMENT: Yes. This is the latest scuttlebutt on the Street. Just yesterday, though, Cisco Systems said it had joined forces with Corning (GLW, $68, up 1) to use Corning's fiber optic components in its Internet networking equipment. So it would be a strange twist for them to run out and buy Ciena, a leader in fiber optical networking. Corning's expertise in optical fiber and photonic products, coupled with Cisco's expertise in building IP-based networks is a powerful combination." said Mike Volpi, chief strategy officer at Cisco Systems. The alliance allows Cisco to learn from Corning's experience in optical networks, while Corning signs up Cisco as a large customer of its fiber optic products. But the rumors persist. Cisco has been seeking to break out of the computer networking business and into the much-larger telecommunications market. If Cisco were to buy Ciena, this would fill a bunch of holes in their product line in one fell swoop. Over the last couple of trading sessions, investors found themselves tantalized by rumors of a blockbuster merger between Cisco Systems and Ciena (CIEN, $100, down 4). It would be a big deal for the $377 billion market cap Cisco, but absorbing the $28 billion market cap Ciena, would be a natural for the firm. However, other analysts think that buying Ciena is out of the question for Cisco ($54, unch). They usually buy firms that are in the $2-3 billion price range. At $28 billion, this is just much more than what Cisco normally goes after. We have noticed that option activity in Ciena has been much higher than normal, indicating increased speculative interest. Although the stock was down today, the stock was up almost 15 points yesterday leaving Ciena trading at a PE of over 500 times earnings. We will say this: If it weren't for these latest rumors, Ciena would be a good candidate for our Dead Money List, not because we don't like the firm, but because if its high valuation. We just think that the stock will be trading for this general price range two years from now. And Cisco may feel the same way. It just might be too expensive even for them!