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

To: Roger A. who wrote (2409)	8/22/1998 10:03:00 AM
From: Gary Korn	Read Replies (2) \| Respond to of 12623

Roger, My guess is that the deal gets renegotiated, perhaps at Tuesday's board meeting. According to Market Guide, institutions own some 80% of TLAB. I don't see how Birck can sell them anymore on the concept of a 1:1 transaction with CIEN. I realize that he has to outbid CSCO (or whomever), so that does put a limit on how little he can offer. If there is simply no other DWDM acquisition candidate out there, and no way to replicate the technology, then perhaps the 1:1 premium can somehow be justified even without $100M of T revenues and even with the risk of having to share Sprint and WCOM revenues. However, this kind of analysis has to be done first if the institutions are going to buy into what was becoming a costly purchase of technology more than accounts. Gary Korn

To: Roger A. who wrote (2409)	8/22/1998 10:56:00 AM
From: craig crawford	Read Replies (3) \| Respond to of 12623

>> But I'm concerned that this drop isn't just a "hiccup" and there has to be something fundamentally wrong with the product or else why would AT&T announce they've stopped evaluation << I don't think it has much to do with CIEN's products. I think it has to do with AT&T playing CIEN for a fool. It appears that it has come down to exactly this. Ciena used to be the only game in town. No other companies could offer carriers what Ciena could, and they were in dire need of bandwith. Hence they were at Ciena's mercy. AT&T's network badly needed upgrading, and obviously their own offspring Lucent was behind the eightball, so AT&T courted Ciena. AT&T figured if Lucent didn't get their act together and come up with a competitive product, then they would go with Ciena. If Lucent did get their act together they could use Ciena as a bargaining chip. Obviously Lucent got tired of getting their ass kicked so they threw big dollars into DWDM and narrowed the gap. I still think that Lucent is behind Ciena in DWDM development, but at least they are coming out with a competitive product. Now that Ciena isn't the only game in town, companies like WCOM, FON, T, etc can play like they don't need Ciena that bad and they can renegotiate relationships with Ciena. In the specific case of Lucent, I think they made a little incestuous arrangement with their former parent. They agreed to sell their DWDM products to T at reduced prices, in exchange for T dropping CIEN like a rock. Obviously the AT&T announcement was intended to hurt the market position of both CIEN/TLAB, and that's what Lucent got out of the deal. Does anyone think the timing of the 2 AT&T announcements were just a coincidence? If so, I have some beautiful "waterfront" swamp...er...property in Florida to sell you. The big disappointment in all of this is that Ciena management was: A) Too stupid to know that ma bell was playing them for the fool and wasn't interested in doing business. -or- B) Knew all along that T was a lost cause but proceeded to mislead shareholders by giving the impression that everything was on track. There is a third option, which would be that Ciena's products or software weren't up to snuff. I consider this doubtful, I'm sure something could have been worked out for such a large "customer". I don't think CIEN/T would throw away a years worth of testing on some software glitch. Perhaps AT&T's rust-bucket network is such a heap of junk that nothing Ciena could offer would work well.