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

To: Glenn D. Rudolph who wrote (1604)	2/26/1998 2:08:00 PM
From: Maverick	Respond to of 12623

RS report on CIEN, part II Ciena is different from a fallen highflier such as Fore. While Fore Systems' original brand of ATM proved expensive for corporate customers, Ciena has already impressed its carrier customers with low prices for a high return. And Fore has recovered modestly because it added other product lines. And demand for Ciena's wares still hasn't been questioned. Nettles says that phone carriers will need DWDM as long as the backbone of their networks are clogged with signals. Phone carriers probably run at 60% to 80% fiber capacity, as they have for about three years, so that demand for DWDM in backbones probably won't ease. If somehow the market shifts that drastically, Nettles intends to adjust. What if, two years from now, there is plenty of backbone bandwidth? For example, a new company called Qwest (QWST:Nasdaq) is building a massive network to flood the market with bandwidth. In that scenario, Ciena's DWDM might not be such a hot product after all. Instead, the real bottleneck might reside in the copper wires that run to homes rather than larger fiber systems. Nettles figures it won't happen, but nonetheless he is studying the horizon to anticipate such a techtonic shift. Ciena, ever acquisitive, could respond by planting itself in the copper business. "That might be an interesting acquisition to consider," Nettles says. He declined to give candidates, but Advanced Fibre Communications (AFCI:Nasdaq) comes to mind. AFCI, which presented at the conference Wednesday morning, builds devices that compress multiple phone lines onto a copper system. Nettles says Ciena will succeed by tailoring products to solve the precise needs of phone carriers. Rivals such as Lucent, he says, have a vested interest in milking old technologies. Given their multiple management layers, they are less agile in shifting to new technology.