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

To: joe who wrote (2045)	4/23/1998 4:22:00 PM
From: joe	Respond to of 12623

<<More importantly, does anybody have reason to suspect sustaining power. Need to know so I can load up the truck with more CIEN. Any technical analysts around???>> The glass is still half full and half empty. Just as I finished my last post I saw CIEN close at +15/32 at 48 1/2 (not quite 49). Anyway, here's article from TSC. Joe ------------------------------------------------------------ By Kevin Petrie Staff Reporter 4/23/98 3:50 PM ET Ciena (CIEN:Nasdaq) extended its technical lead over the competition with a small acquisition, giving the addled stock a boost Thursday while the Nasdaq slipped. The builder of optical network components added 1 9/16 to 49 9/16 Thursday afternoon after disclosing a deal to acquire privately held Terabit Technology for about $11.7 million in stock, cash and the assumption of certain Terabit options. Ciena already owns 20% of Terabit, which develops components for fiber-optic networks. It expects a charge of 8 cents to 10 cents a share in the April quarter relating to the acquisition. Bulls like the acquisition for two reasons. First, it makes strategic sense. Second, some pros believe that an acquisition close to the end of a quarter bodes well for a company's earnings outlook. One Ciena shareholder explains the logic. "If you're using the stock to buy another company, we assume that the company being purchased has seen the books and has determined that everything is okay," says analyst Paul Kreiger with J. & W. Seligman. "Of course, this thinking doesn't always work." It didn't work, for example, when Cascade purchased Sahara Networks for stock in January 1997 -- shortly before reporting a troubling rise in receivables. Kreiger remembers that very well, because he owned stock in Cascade, now part of Ascend (ASND:Nasdaq). But Ciena's strategy looks sound. The company is buying Terabit outright to claim a key solution for optical fiber networks and keep it out of the hands of competitors like Lucent (LU:NYSE). With Terabit, Ciena also takes another step in extending its array of optical products. Broad-based competitors tend to steamroll one-trick ponies. While it's unclear when Terabit technology will hit the market, it promises to eventually help Ciena tamp down prices and preserve margins. Ciena is the first supplier to bring a new technology called dense wavelength division multiplexing, or DWDM, to fruition. With DWDM, telephone carriers can fire multiple channels of light signals through an optical strand of fiber -- increasing their bandwidth 16 times or more. While Lucent has shipped a 16-channel product, Ciena sells a 40-channel product and promises to scale to 96 channels at customers' bidding. Lucent intends to give the much-contested customer AT&T (T:NYSE) an 80-channel unit for testing later this year. Other rivals such as Northern Telecom (NT:NYSE) are also rumbling into the DWDM business. Terabit, a startup, is simply an R&D shop that's developing extra-sensitive receivers for light signals. These receivers are one of the instruments that, when fitted into Ciena's coming generation of DWDM, will trim the prices carriers pay for products and help carriers send signals greater distances with lower risk of failure. Analyst Steven Levy, at Salomon Smith Barney, counts Terabit as a wise move for Ciena. Ciena says it makes certain ingredients in-house, rather than buy them, in order to save money and streamline the production process. Says a Ciena spokesman, "A lot of vendors have great ideas in the laboratory, but they don't know how to manufacture them in any great volume." On a separate issue, Levy says recent contracts will help Ciena fill the $100 million hole for this fiscal year ending in October that major customer WorldCom (WCOM:Nasdaq) created by delaying orders. Ciena's stock fell more than 25% to 42 the day after it alerted Wall Street to the WorldCom slowdown in late February; recently shares have rebounded somewhat. Levy has rated Ciena a buy since August; his firm has not done underwriting for the company.