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

To: Glenn D. Rudolph who wrote (1377)	2/21/1998 10:31:00 AM
From: Gary Korn	Read Replies (2) \| Respond to of 12623

I'm not promoting any kind of acquisition rumor, but I do like to figure what you have to pay for a company vis-a-vis what you get. If X were to buy CIEN at $50/share, it would have to pay $5B. For that, it would get about $600MM in revenues and annual net income approaching $150MM. In contrast, it has been said that a minimum reasonable bid for ASND is say $50/share, for a cost of about $10B. For that, you get $1.2B in revenues and annual net income of about $200 to $250MM. As the cost for CIEN would be half that of ASND, and as the revenues and income are about half as well (even a tad better than half), I do believe that $50/share is a fair current value for CIEN (and this totally discounts its heretofore torrid growth rate). Looked at another way, acquisitions in this sector have gone off at about 8 to 10 times sales. That values CIEN at $4.8B ($48/share) to $6B ($60/share). Once again, this ignores CIEN's strong position in DWDM and its torrid growth rate (LU paid about 9 times sales for Livingston, and got nothing near the sales or the growth rate.) Given either valuation approach (and these are just my crazy-Korn evaluations), I like being in CIEN at a price below $45. So I am. On another note, the biggest danger signal to me is not LU's technology (there always will be new technology), but the heavy reliance upon so few customers. That said, I think the WCOM deferral is actually a blessing in disguise: It clearly is pushing CIEN to broaden its customer base, something it simply has to do if it is to become one of the big boys/girls. Gary Korn

To: Glenn D. Rudolph who wrote (1377)	2/21/1998 1:17:00 PM
From: michael a. rowe	Read Replies (1) \| Respond to of 12623

JDS is a canadian company ...trades on TSE symbol JDS .... that sells fiberoptic components to CIEN NTL LU etc.... about 10% of JDS revenues come from CIEN (my opinion only). JDS currently trades at about 25-30 1999 earnings and their earnings grew by 100% over last year. I dont think they are overly dependant on 1 or 2 customers like CIEN, since they sell to all parties involved in this industry...they supply the suppliers. I do think that the market has overreacted on CIEN...this is a tremendous chance to pick it up at a reduced price. mike