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

To: Glenn D. Rudolph who wrote (6414)	2/11/1999 11:07:00 PM
From: bh	Read Replies (3) \| Respond to of 12623

Why Yesterdays CIEN Announcemnt Is Significant by: BFMX (46/M) 39740 of 39803 As many of you are undoubtedly aware, yesterday GTS, the 89% owner of Hermes Europe Railway (or HER), announced the deployment of an IP over DWDM platform using CIEN's 40-channel system. Although the initial award occurred last April, there are several meaningful (and favorable)implications to CIEN: 1.The revenue effect should well exceed $100m over the next two years, or about 40% more than originally expected in the April agreement. This is managements estimate, which is based on the following: a)In April '98, HER laid 3,000 kilometers (km) of fiber. Today, it has 10,000km in place, deploying CIEN in about 6,000 of those kms. HER now plans to exceed 25,000km. With CIEN having shipped $50m thus far, and now contracted to be deployed throughout the rapidly expanding system, there is a great deal of incremental revenue yet to be realized. The potential to book another $200m in revenue over the next two years, solely from this contract, is quite achievable. 2. CIEN was originally (last April) awarded a 1 year deal. Because of HER's high degree of satisfaction, HER indicated that it intends to make CIEN its exclusive provider come expiration of the existing contract in April. Along those lines, please note that CIEN remains the only vendor deploying 40 channel systems in service providers networks. 3. There are further European opportunities. With telecom deregulation in full force in Europe, there are many opportunities for CIEN to capture meaningful business. One of our UK based analysts believes Teleban, a UK based carrier planning a buildout similar to HER, will select CIEN as its prime DWDM vendor. Admittedly, this is somewhat speculative, but we place pretty good odds that this will, in fact, materialize. In the US, we think CIEN has a good shot at landing a portion of the soon to be announced awards by IXC Communications, a contract expected to be split among several vendors. In sum, yesterdays announcement is far more consequential than most investors realize. It is clearly a sign of a rapidly expanding market as well as of CIEN's ability to execute by hitting HER's aggressive delivery schedules and providing very satisfactory customer service. Surprisingly, not all analysts get it. Dain Rauscher, a Minnessota firm, put out a pedistrian analysis this morning of the contract (but still an Aggressive Buy). Robertson Stephens today put out a far better analysis. This was my first post since last Friday's marathon post, but will also be my last for about 2 weeks as I'll be visiting companies over the next 10 days. Please disregard imposters using similar appearing handles. Posted: Feb 11 1999 10:02AM EST as a reply to: Msg 1 by YahooFinance Replies: View Replies to this Message Related Links Quote Profile Research Insider