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

To: gbh who wrote (3029)	9/14/1998 8:42:00 AM
From: Gary Korn	Respond to of 12623

CIEN CC: Nettles: "Key thing...the strategic fit is there, but not the vote...we waived termination fees in light of market reaction which means unlikely shareholder approval...negative impact on valuation is harmful to both employees and customers...CIEN would have been undervalued, and we felt it improper and not right to do that.... "Short term financial performance has made it problematic to carry on with this transaction... "Fundamentals of our business remain strong... "Mike Birck and I talk a lot, have a good relationship...this is not a falling out, just a mutual recognition of realities... "We would have benefited from their sales channels...still, we are excited about our market opportunities...our prospects as independent entity remain very strong....can do better job rebuilding shareholder value as independent company... "DWM optical networking is creeping further on the network...market opportunity in both long distance and local side remains an extremely large opportunity... "Stong balance sheet, over $200MM in cash...

To: gbh who wrote (3029)	9/14/1998 8:48:00 AM
From: Gary Korn	Read Replies (1) \| Respond to of 12623

Joe re. Q3 results: Rev. 129MM, a 6% increase in 3Q year over year. For 9 months, Rev. was $460MM, compares to $280MM last year period, an increase of 47%. Shipped to 11 customers, recogn. revenue from 3 lines: 40 channel, original 16 chann, and now have recogn. revenue on the Firefly/Metro (local loop). Building international presence. 25% this quarter, up both in real dollars and as a percent. of revenue. Some WCOM revenue, not very significant. Net income for 9 months up 7%, at 89MM. Less $20.6MM Pirelli settlement. EPS was .15/share, excluding 1 time charges. Was .29 in 2Q. For 9 months, was .81/share. Gross profit: 45%. Shows impact of compet. pressures and higher unabsorbed mfg. costs due to decline of shipments. We are resetting our gross margin target at 45-50. Short term: below this range.

To: gbh who wrote (3029)	9/14/1998 8:56:00 AM
From: Gary Korn	Read Replies (2) \| Respond to of 12623

Nettles again: Actions to take: Build R&D Build market support infrastructure in Europe Redivide responsibilities in sales force for opportunities Sharpen forecasting skills Focus attention to engineer costs out of the product DTI, we were disappointed, but not giving up. Strictly a pricing matter from my information. DTI may come back into the fold at some time as the year goes foward. AT&T, we think we know what happened, but not prepared to discuss now. They have directed employees not to talk to us. Allegations of technical/reliab. problems spoken of by competitors: Categorically not true. We had 1 power supply that shorted out, which caused consternation in AT&T world. Our customers tell us that our product is most reliable in their network. Working hard to expand customer base. You will hear announcements in the next several weeks in that regard. 11 customers in Q3. That will grow. Our equipment is in field test at Bell Atlantic. Have shipped Firefly to 2 customers. Have announced OC192 capabilities.

To: gbh who wrote (3029)	9/14/1998 9:17:00 AM
From: Gary Korn	Read Replies (1) \| Respond to of 12623

Nettles again: Guidance: We've substant. reset short term expectations. Q4 will be materially below Q3. 1999 will be modest growth over 1998. We've been conservative, maybe too conservative. But warranted in light of past few weeks. Too early to count on growth opportunities. "Our goal is to underpromise and overdeliver." "Proposal activity is very strong. We don't expect to win all the deals, but our fair share." Q&A: DRP: 4Q expectations? Nettles: Can't say now. Also, two 10% customers. Don't expect the previously mentioned $25MM to come in, that was a customer we've talked about already (must be DTI). Q: There had been a disc. of a $10MM order last time? Joe: Will be recogn. in 4Q. Q: 1999 up with/without 1 time charges? Joe: In reference to top line, i.e., revenue. Net income increase includes 1 time charges. Q: How does CIEN deal with price competition? A: We have best product, which helps; bundling fiber with equip. is unusual; there is a threat to price, which is why we are looking at lower margins. We are in 3d generation product line, reputation in industry for service, quality and product reliability. Q: 1999 EPS up modestly? A: In 1998, 57MM income including charges. So, something better in 1999. Q: Market opportunities? A: 2.5B to 3.5B market/year. Lot of growth in Europe. In terms of execution, I'd emphazise we've not lost a lot of business to competitors. With exception of T and DTI, few situations where we expected to win, then lost. So, confident we have right products. Need to focus on resources to deal with customer requirements where we have opportunities identified. On Pirelli, guess is that they bundled DWDM with fiber cable. Q: How do you compete against the big guys, and their bundling? A: Most optical networks use existing fiber, so bundling with fiber is an exception. Relationship with CSCO is an advantage to us.

To: gbh who wrote (3029)	9/14/1998 9:28:00 AM
From: Gary Korn	Read Replies (1) \| Respond to of 12623

Q&A continued: A: Remember, this conversation with TLAB started with them calling us, not the other way around. There are still partnering opps. with TLABs, such as in Latin America. Q: What about CSCO relationship? A: We think it is very important. Together, working to promote understanding of new architecture of IP over ____. Sprint ION is a very important program. They are way out in front in terms of their technology. Q: Revenue opp for OC-192? Need to reset employee options? A: OC-192 has been underway for over a year. General availability 1H99. Development cost was modest. Revenue opportunity still small, because most fiber is not suitable for OC-192. Still, important technology on an incremental basis, as carriers are looking for this 2-3 years down the road. With regard to options, clearly important to motivate employees. We will take a hard look at that over next few weeks. Q: Accelerate Firely/Metro? A: Metro will be a powerful product for CLECs in relatively short term. Will see an exciting development very quickly with CLECs, after that RBOCs will move.

To: gbh who wrote (3029)	9/14/1998 9:30:00 AM
From: gbh	Read Replies (1) \| Respond to of 12623

It will obviously take some time for this company to work itself back into favor with the street. They will need a number of significant new wins to even come close to their former prominence. Right now this is a tarnished company. Tax loss selling will soon kick in, too. I hate selling at a bottom but with the bull looking like it might once again run, being in a stock like CIEN for the next year probably doesn't make a lot of sense.

To: gbh who wrote (3029)	9/14/1998 9:34:00 AM
From: Gary Korn	Respond to of 12623

Q: WCOM/Sprint A; Current assessment, a little later on WCOM then orig. expected. Encouraging indications so far. WRT Sprint, a second supplier has not been named yet. Opp. for next year is solid either way, greater if no second supplier is named. Larry Wong has the assignment to follow up on these 2 customers. Q: Other customers? Price pressures? A: Even traditional suppliers have to make money. We've targeted cost reductions in more expensive components, can give us a substant. buffer to price pressure. We'll see how it turns out.