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

To: t36 who wrote (6596)	2/24/1999 4:01:00 PM
From: john dodson	Read Replies (1) \| Respond to of 12623

t36, Fundamentally, I believe you are correct that Ciena's last earnings cc was not exactly a thing of beauty, and it certainly shouldn't set fire to the stock. However, I don't think fundamentals are driving Ciena trading right now. Recall that Ciena IPO'd way high (30's or 40's if I rememeber correctly), and went up from there. Wall street loved Ciena, and thought it was a big part of the telecom boom. Well, when the TLAB deal fell through there was a glaring accusation that Ciena was a one-trick pony. That is, their revenues were way to concentrated on way to few customers. Then they were losing bids and the loyalty of the few customers that they had was called into question (like sprint). Valid or not, that clearly left a lingering cloud of uncertainty hanging over Ciena. Needless to say, Ciena wilted and weakened all the way down into the single digits. Talk about overdone! Well, to make a long story short, Ciena has clearly taken some initial steps to broaden their customer base, and prove their viability. Emphasis here is on "intial steps". This seems to be enough for the fund managers to start piling back into Ciena at the moment, though. After all, if Ciena could possibly make it alone, then who knows how high the share price could go before they get taken out, which make no mistake about it, is THE end goal of current Ciena management. They will eventually merge. Only question is when & how much. My take only, John Dodson

To: t36 who wrote (6596)	2/24/1999 4:20:00 PM
From: Doughboy	Respond to of 12623

What's driving this is a number of factors: 1. Ciena was in an oversold condition at 12-15, mostly because of end of the year tax loss selling. 2. Ciena announced three or four nice contracts in the last quarter: a Japanese ISP, Enron Communications, and a big European new build. 3. It is becoming clear that Ciena is the dominant DWDM provider in the market. Despite Lucent's and Nortel's attempts to sell themselves as major competitors with their vaporware, Ciena has shown that it has more than 35% of the WDM market and more than 50% of the DWDM market (16 channels & higher)--a market that is expected to triple by the year 2002. I think that they still are the only ones to have rolled out a 40-channel system to a customer. 4. The quarterly report, while mediocre and cautious, showed that Ciena has probably gotten over the hump. Revenues increased; margin improved; their customer base diversified; they made money. Importantly, they soundly beat analysts' estimates. 5. Two analysts upgraded their ratings on Ciena, and several others increased their numbers going forward. 6. And now, the Sprint news that it will not seek out a second source supplier for DWDM in 1999 as was expected. Sprint represents almost 50% of Ciena's business, so this is a very positive development. IMO, we have gotten bit ahead of ourselves right now; I would expect Ciena to drop down into the 23-24 range again in the next week or so. My end of the year target: $40 (based on 50x Y'00 earnings estimates of .80).