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

To: craig crawford who wrote (1282)	2/20/1998 12:58:00 PM
From: Glenn D. Rudolph	Respond to of 12623

CIENA opens down 22 pct on Q2 warning Reuters Story - February 20, 1998 12:05 %TEL %US %HOT CIEN %PUB WCOM %ENT T FON V%REUTER P%RTR NEW YORK, Feb 20 (Reuters) - Shares in CIENA Corp started more than 22 percent lower on Friday after the company warned that its fiscal second quarter earnings would be lower because of a slowdown in key customer orders. CIENA shares were 12-7/8 lower at 45-1/4 in heavy early trading of nearly four million shares, as CIENA was the most active Nasdaq stock. After the markets closed Thursday, Linthicum, Md.-based CIENA blamed the expected shortfall on a delay in orders from WorldCom Inc . WorldCom told CIENA this week that it altered its purchasing plans and would require substantially fewer CIENA systems in the near term. A CIENA spokesman said WorldCom accounted for 23 percent of the company's revenues in its latest quarter. CIENA produces and sells dense wavelength division multiplexing systems for fibreoptic communications networks. The systems increase the band width on fiber-optic cables that boost the capacity for information traveling through the fiber-optic cable. CIENA also said the timing of orders from AT&T Corp remained unpredictable. UBS initiated coverage of the stock with a hold rating, citing the company's high level of customer concentration, decreasing operating margins and heightened competition. "In the short term, the company should face a challenging second quarter and third quarter given reduced spending by WorldCom," UBS analyst Nikos Theodosopoulos said in a research note. Sprint Corp accounted for 50 percent of CIENA's revenues in its fiscal first quarter -- bringing the combined contribution of Sprint and WorldCom to nearly 75 percent, the spokesman said. In its first quarter ended January 31, CIENA reported revenue of $134.3 million, more than double the $53.9 million in the year-ago quarter.

To: craig crawford who wrote (1282)	2/20/1998 1:23:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 12623

You worry about yourself. I want everyone to remember that CC was standing firmly behind CIEN when everyone else was talking like CIEN is "finished". What a crock. I want to be on record that I feel CIEN will do just fine. Glenn

To: craig crawford who wrote (1282)	2/24/1998 4:08:00 PM
From: Red Dragon	Read Replies (3) \| Respond to of 12623

It is probably true the Ciena will be dead money for several months, however, barring any other major news. I never got a chance to elaborate when I made the above statement last week. I think that the selling pressure for Ciena will overwhelm buying pressure for the near to intermediate term. Buying pressure - What type of investor would buy Ciena in the near term: 1) growth/momentum : You can bet these guys are not going to darken Ciena's doorstep anytime in the near future. No doubt their money was a major driving force in the past, and their money will be missed. They're all heading to the exits, if they have not already done so. 2) Value: Despite the recent drop, Ciena is still far from cheap. It is starting to look decent based on trailing earnings and growth record, but future prospects are much murkier. With flat to declining earnings growth in the near future, the P/E may actually expand if earnings falter. There is no way conservative value investors are getting near this stock. 3) Fundamentalists: This is the only group I can see that might be active buyers for now. Many on this thread have given good fundamental reasons why Ciena is attractive now. Selling Pressure: 1) The stock has not been below 40 since June 1997. This means that every single investor who purchased and holds stock since June 1997 is in the red. Many will be only too glad to dump the stock on any rally attempt. 2) Insiders/original investors. Many of these guys purchased the stock for less than 1-2 dollars a share, and have seen millions evaporate in the past week. Wouldn't be surprised to see a few more chips taken off the table. 3) Momentum investors: Out the door, if they have not already left. FWIW, I dumped the stock yesterday at 41 at a loss. Fortunately, I sold covered calls prior to the drop for a nice gain, which just about evened everything out. I continue to like the Ciena's fundamentals, but I think there will be plenty of time over the next several months to cherry pick it at a better price.