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

To: Helios who wrote (1341)	2/20/1998 5:07:00 PM
From: Gary Korn	Respond to of 12623

NEW YORK, Feb 20 (Reuters) - CIENA Corp, whose shares tumbled nearly 25 percent Friday on news of a slowdown in orders, said it is moving quickly to plug a revenue shortfall created by order delays from one of its biggest customers, WorldCom Inc . The Linthicum, Md.-based company, which produces systems that can boost the capacity for information traveling through fiber-optic cables, released its fiscal first quarter earnings and had a conference call with analysts after the markets closed on Thursday. WorldCom informed CIENA earlier this week that it was changing its purchasing plans and would require substantially fewer CIENA systems in the near term. WorldCom accounted for 23 percent of CINEA's revenues in the first quarter, which ended Jan 31, when total revenues were $134.3 million, a CINEA spokesman told Reuters. "That is obviously different than our earlier expectations and it's not good news," CIENA President Patrick Nettles told the conference call. "On the other hand, I'd like to emphasize it's not devastating." A tape recording of the call was made available to reporters today. Nettles said the company hoped to make up a "significant majority of that (WorldCom) shortfall" with additional revenues from existing and potential new clients. WorldCom purchases may resume later in 1998, CIENA said. "Obviously there is not a single account that can fill this gap in the short time frame that we have to respond, so we're really focused on the level of activity among a number of smaller accounts," he said. He emphasized that Sprint Corp <FON.N>, which accounted for 50 percent of CIENA revenues in the first quarter, will remain a strong client this year. "We believe Sprint will remain a very important part of our business through 1998," said Nettles, who met with Sprint officials earlier this week following the WorldCom announcement. In the conference call, Nettles outlined several other developments, including CIENA's acquisition of ATI Telecom International Ltd (Alta) and its impact on margins, and the increasingly competitive international market.

To: Helios who wrote (1341)	2/20/1998 5:08:00 PM
From: nghi vu	Read Replies (1) \| Respond to of 12623

Well, as far as commenting on management at DELL AND COMPAQ, THAT is all hindsights. Will see how CIEN management handle this little crisis in 6 months but it is comparing apple and orange with DELL & COMPAQ current level and previous problem. Most thought they were'nt any good at the time, that is why they dropped 50%.

To: Helios who wrote (1341)	2/20/1998 5:20:00 PM
From: craig crawford	Read Replies (1) \| Respond to of 12623

<< Any comments on how Ciena's management team stands up against theses guys? >> Too early to tell. CIEN hasn't been around long enough. I would say they have done a fantastic job so far. The CEO is supposed to be interviewed on CNBC today. (an hour or so?) I think CIEN will post great numbers for 1998. The company said they were still comfortable with revenue estimates of $600 million. That is a 62% increase over the $373 million reported in 1997. CIEN was forecast to earn $1.47 for 1998. That is where the worry lies. They already posted 0.37 for Q1. That means they need to make 1.10 for the next 3 Q's. That's 36.66 cents per quarter. In other words CIEN could have flat sequential EPS for the next 3 Q's in a row and still make the original estimate of $1.47 I don't think they will have too much problem coming up with 3 flat Q's. Maybe Q2 and Q3 are slightly below the 37 cents for Q1 and they post a strong resurgence in Q4. At any rate if they post a $1.47 for 1998 they will have achieved 35% growth. (I think they did $1.09 for 1997. Some sources say $1.07. It's at least 35% and maybe 37%) A multiple of 35x $1.47 = a price of 51.45 At a price of 42 CIEN would carry a multiple of 28.57 The key to the story is do you think CIEN will make $1.47?