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

To: Doug Moulton who wrote (3856)	9/28/1998 12:06:00 PM
From: gbh	Read Replies (1) \| Respond to of 12623

Top Stories: Multiplexing Light into Dollars By Kevin Petrie Staff Reporter 9/28/98 9:39 AM ET In five short weeks telecom equipment maker Ciena (CIEN:Nasdaq) went from hero to pariah. The company's shares nosedived after Ciena lost contracts, warned of missing profit estimates, and finally was forced to wave goodbye to a $7.1 billion all-stock merger with Tellabs (TLAB:Nasdaq) on Sept. 14. But Ciena's stumble does not spell trouble for other companies hunting for profits in the fiber-optic business. Ciena's main claim to fame was its network technology called "dense wavelength division multiplexing" that could squeeze tons of data onto existing fiber-optics. DWDM boxes pack four, eight, 16 or more channels of light signals into a single strand of optical fiber, multiplying its capacity. Long-distance carriers love DWDM because it's an economic way to ease network bottlenecks. Laying one mile of optical fiber might cost a telephone carrier $60,000, but using DWDM to boost the capacity of an existing fiber mile runs roughly $500 per channel, said Craig Collins, CFO of Optical Coating Laboratory (OCLI:Nasdaq), which supplies the big telecom equipment makers. For the nine months ended July, Optical Coating's revenue jumped 16% to $185 million while earnings soared 82% to $8 million. "The marketplace is still clearly growing rapidly," says Kevin Kalkhoven, CEO of Uniphase (UNPH:Nasdaq). Uniphase, a supplier of components to DWDM companies, reported net sales for the year of $175.8 million, an increase of 64% over the prior year. Analysts say the DWDM market is growing 20% this year, although prices might fall by as much as much as 10% in 1999. Equipment suppliers now find that DWDM boxes can fuel sales of other network products. "[DWDM] is what's going to win them contracts," says Daniel Gay, North American sales manager for U.K.-based component supplier IOC. "You can use it as a shoehorn." Ciena's troubles began early this year when a major customer delayed orders indefinitely, but that appears to be an isolated case. Executives at both Italy-based Pirelli and Lucent (LU:NYSE) say that they've seen no pause in carrier spending. Faced with growing competition, Ciena was forced to cut prices, which crimped its bottom line. Rivals Lucent, Northern Telecom (NT:NYSE) and Alcatel (ALA:NYSE ADR) are also in the hunt. Concern about overall carrier spending seems unfounded. On Sept. 17 the French giant Alcatel warned of a disappointment later this year. However, the fiber-optical division did not appear to be part of that slowdown -- in the first half of 1998 DWDM boxes boosted sales of its "transport" network products by 17% from one year earlier. Uniphase's Kalkhoven says Wall Street has misread the shock from Alcatel. Carriers haven't slowed spending. Rather, the carriers are buying new technologies to handle demand for data networking and fewer conventional systems. Who's buying? The mammoth AT&T (T:NYSE) recently deployed hardware from Lucent. Denver-based upstart Qwest (QWST:Nasdaq) is operating eight-channel DWDM gear from Nortel, and can jump to 32 channels later this year. Its peer Level 3 (LVLT:Nasdaq) intends to deploy DWDM on its network within three years. MCI WorldCom (WCOM:Nasdaq) has teamed with two international carriers to link Australia and the U.S. with an undersea DWDM system. Even corporations show a glimmer of interest -- for example, Microsoft (MSFT:Nasdaq) is testing 16-channel products from Lucent on its campus network. The DWDM business will grow about 20% to $1.8 billion this year in North America, thanks largely to buying by long-distance carriers. The estimates come from the research firm Ryan Hankin Kent, whose clients include most DWDM companies. Ryan Hankin Kent says Ciena claimed a 26% share of the market last year, Lucent had 34% and Nortel had 21%. Alcatel and Pirelli were roughly tied at 7% and 8% respectively. Still, the competition will bite. Michael Ruddy with Pioneer Consulting estimates that average prices will fall 5% to 10% each year. Pirelli, for one, agrees with the estimate. (Lucent declined comment and others couldn't be reached.) And paring costs to keep pace will be tough. "There's going to be margin pressure," says analyst Mat Steinberg with Ryan Hankin Kent, although he wouldn't quantify the effect. Uniphase's Kalkhoven is confident his company can exploit economies of scale to cut costs. "We're a classic semiconductor house," he says. "What we need is volume." That's an order likely to be filled.

To: Doug Moulton who wrote (3856)	9/28/1998 12:25:00 PM
From: Curtis E. Bemis	Respond to of 12623

<Anybody out there notice that GSCO is selling like mad this morning?> Well, I see big blocks traded--If it is Goldielocks selling, who is buying it ?? The 20,000 share blocks fly by

To: Doug Moulton who wrote (3856)	9/28/1998 6:00:00 PM
From: saju chacko	Read Replies (1) \| Respond to of 12623

read all of this...... i did notice that GSCO was selling some CIEN today.... however the selling seemed to be either (1) some profit taking from what it bot at 11 and something (2) jumping from the bid to ask just to trade and try to raise volatility to make the scared people sell OR (3)selling to piss of DAIN who released the content of its 9/9 and 9/10/98 research report ...... STRONG BUY...... even though GSCO and DAIN seem to be on the same side now... GSCO might not like someone else being the center of attraction in this stock well .... now lets see what they do.... Saju