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

To: Nilda Ovalles who wrote (1891)	4/3/1998 12:12:00 AM
From: dave luken	Respond to of 12623

Here is thestreet.com article about cien. Top Stories: Bears Circling Ciena, but Future Looks Bright By Kevin Petrie Staff Reporter 4/2/98 5:33 PM ET Ciena (CIEN:Nasdaq) still glitters, but some Wall Street watchers have donned tinted glasses. In six sessions, shares of Ciena, last year's darling IPO, have slipped about 17% to 40 1/2 at Thursday's close. Meanwhile its broad-based rival Lucent (LU:NYSE) has climbed about 12% to a record high of 69 3/8 on a split-adjusted basis. Ciena, a builder of components for fiber-optic networks, is suffering because shorts are lobbing several speculative bombs at it. They include Ciena's missing the consensus figure of 28 cents a share for the April quarter, losing a blockbuster contract and getting beaten badly by Lucent. Others simply warn that competition looms large. Yet these issues, many of which are dated, remain little more than speculation. Ciena said six weeks ago the April quarter will be flat or lower than the year-ago period because major customer WorldCom (WCOM:Nasdaq) has slowed spending. Investors washed away one-fourth of its value the next day, but since then it's up slightly. The company hasn't changed its guidance since then. Ciena remains likely to claim big business from AT&T (T:NYSE) later this year. And BellAtlantic (BEL:NYSE) said Monday it will buy a small batch of Ciena's "dense wavelength division multiplexing products." BellAtlantic is the first Baby Bell to purchase DWDM technology, which increases bandwidth by sending multiple wavelengths, or channels of light signals, through a strand of optical fiber. As with AT&T, Ciena might have the edge on its big rival at BellAtlantic. Lucent is still negotiating its contract, while Ciena's is being finalized. Ciena product now sits in BellAtlantic's lab. A BellAtlantic spokesman couldn't say whether his company is even testing DWDM gear from Lucent. Bulls reason that Ciena will be rewarded amply for holding the lead. "This is an issue of timing of revenue," says one money manager who asked not to be named. "Sentiment can change and people get nervous, but those are the times that are buying opportunities." "The stock is a gift to you at these prices," adds the manager, who is buying Ciena this week. Ciena trades at 31 times trailing earnings, and 27 to 28 times the $1.45 to $1.50 a share in earnings this manager expects in calendar 1998. (Ciena's fiscal year ends Oct. 31.) The manager figures Ciena would be "reasonably" valued at about 50 a share. Trading at 69 7/16 a share, Lucent, meanwhile, has climbed to 199 times trailing earnings. The money manager also owns Lucent, though he's holding, not buying. "The stock gets ahead of itself, but I'm not going to be the judge of that," he says. Still, for now the market is focusing on Ciena's perceived problems. Many investors say that, despite its lack of products, Lucent holds "mindshare" with both Ma Bell and the Baby Bells. Some investors want to believe that Lucent will deliver DWDM and elbow Ciena to the side. Analyst Tim Savageaux at BancAmerica Robertson Stephens warned of an altered climate for the DWDM business in a research note on Monday. "The competitive field is very tight indeed," Savageaux says. Lucent, Alcatel (ALA:NYSE) and the Italian concern Pirelli are not competitors to take lightly, he says. Moreover, the Baby Bells are considering DWDM at their characteristically glacial pace. "The way the stock's acting, I'd say the shorts have gotten the upper hand," says research director Chuck McCurdy at SMC Capital, a Ciena shareholder. His bullish stance remains unchanged: DWDM "spending patterns are going to be bumpy," but "the money is going to be spent." ÿ ÿ c