Link Up to Telco Equipment on Downgrade

At last, a test case for how strong the telecom equipment story is: a downgrade from Merriman Curhan on Oplink (OPLK - commentary - Cramer's Take).

Understand, I have not recommended Oplink, one of the few names in this group that I haven't. Oplink designs and manufactures optical solutions and equipment for Ciena (CIEN - commentary - Cramer's Take) and Huawei. The Merriman report says there is an inventory back-up at Huawei (thank heavens, none at Ciena, which is one of my absolute favorites). The inventory snafu at Huawei, according to the report, is a BT (BT - commentary - Cramer's Take) problem and isn't related to the U.S buildout by the Verizons (VZ - commentary - Cramer's Take) of the world.

You want to focus on this because the group hasn't experienced anything negative for most of the quarter. It comes on the heels of good news from Bookham (BKHM - commentary - Cramer's Take), which now has cleaned up its balance sheet totally, with a terrific move to get rid of the last bit of debt left over from the legacy days.

My call: Let's hope the group comes in on the Oplink downgrade, because we may be able to get in at cheaper levels, in light of the Bookham number and the obvious good news in Level 3.

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Please note that due to factors including low market capitalization and/or insufficient public float, we consider Oplink and Bookham to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

At the time of publication, Cramer had no positions in the stocks mentioned.

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