Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: cfoe who wrote (10450)	2/21/2001 2:30:30 AM
From: cfoe	Read Replies (1) \| Respond to of 12623

I promised someone on this thread (James?) feedback from CIBC Oppenheimer about NT. Here goes. On 2/16, the morning after the earnings warning, CIBC downgraded NT. Here is what they said [my comments, if any are in brackets]: Downgrade due to lower ’01 telecom spending in the U.S. market. Slowdown was strongest in optical networks and switching. NT’s cautious outlook and belief current slowdown will continue through 4Q adds to overhang on communications food chain created with last week’s Cisco call… Referred to management’s cc as “abbreviated.” NT management indicated networking revenues in the long distance sector could grow 20% for the year, but metro optical sales could grow 40%-50% for the year. [Note that Ciena says metro market might be $1 billion, a lot smaller than switching market.] We [CIBC] suspect DWDM related sales will continue to grow faster than SONET - each being about 50% of the $10 billion optical networking sales last year [2000?]. NT management indicate that they were not losing market share in optical networking equipment, a statement Wall Street will have trouble digesting after stellar quarterly results form ONI Systems and Ciena. Having 100% of the 10 Gbps market in 2000, by definition NT appears to be losing market share. Clearly, service providers are not expanding network routes, but instead [are] adding incremental capacity using existing routes (i.e. purchasing OC-48 and OC-192 line cards and lighting up the ends of existing fiber using existing DWDM equipment). This trend is not new news…and trend has a direct negative on new fiber builds and fiberoptic cable providers such as Lucent and Corning. (Goes on to say how NT’s news will further hurt Corning, JDSU, Agere (Lu) and to a lesser extent New Focus. Longer-term we [CIBC] remains bullish. It may take another few months…..but spending on next generation optical networking equipment will continue to grow substantially in the longer-term. We [CIBC] have seen recent successful debt offerings by XO Communications and McLeod [I know latter is a new customer of Ciena, is former also a customer?]. If the capital markets open further optical equipment spending may see a sizeable acceleration.

To: cfoe who wrote (10450)	2/21/2001 7:57:43 AM
From: James Fulop	Read Replies (3) \| Respond to of 12623

>>It included the following two items: 1) DWDM market expected to grow from $7.4 billion in 2000 to $36.5 billion in 2005; 2) Worldwide optical transport market expected to double from $23.5 billion in 2000 to $57.4 billion in 2005.<< Isn't there some overlap with those categories, as DWDM is one of the technologies used in (but not limited to) optical transport? This raises a larger issue that we have discussed here in the past-the subjective variations of definitions for these categories and how confusing (and sometimes misleading) they can be. And although I see you are including switching as one category of Ciena's revenues, I don't see it in your macro revenue categories of DWDM and optical transport. >>Also I am planning to divide Ciena's revenues into the following categories and initial (for 2001) percentages: DWDM - 80%; Switching (CD/CI) 10%; Metro - 7%; all else (including services) 3%.<< Where would you put in future revenue from the Cyras K2? I believe the above metro category is really only metro transport and that the K2 will bring in additional revenue as metro access aggregation. >>I will not try and develop a net contribution by category, but will do a gross margin by category. So any help with estimating individual product gross margins will be helpful.<< A tough endeavor given the secrecy of this industry-it seems to me that the higher the margin of the product, the less likely the company will give out exact information on it as they know both competitors and customers are paying close attention (indeed this was said in so many words on a couple of CCs about the CoreDirector, but this secrecy is not limited to Ciena...) I can, however, help with a comparison of margins for each category, but just not the absolute numbers as I have never heard them given out during the years I have been following Ciena. >>In this II piece, they named Williams as a Ciena customer. I know this was rumored in the past, but do not remember seeing public confirmation. Did I miss this, or is this new info?<< Williams has been an announced customer for quite some time. ciena.com >>We [CIBC] have seen recent successful debt offerings by XO Communications and McLeod [I know latter is a new customer of Ciena, is former also a customer?].<< Yep, originally announced as Nextlink, its former name. ciena.com