Ciena, Customers Just Can't Get Together

For example, analysts blame tight-fisted Telmex for much of the sales shortfall, and note that AT&T has been mostly quiet on the order front. Others wonder if Ciena's highly regarded optical switch, the CoreDirector, is suffering through a slowdown in demand as big network expansion plans get pushed aside.

Observers credit Ciena for its bold acquire-through-the-gloom strategy that helps take the focus off its core optical business by highlighting new products and customers added to the mix.

To be sure, the company's in no danger of facing financial problems. Though it continues to lose money, the company has a hefty bank balance, with $1.75 billion in cash and investments. That has allowed Ciena to buy some proven technologies, a strategy that Smith emphasizes isn't a smokescreen to hide any weakness in its main business.

"We've been very clear about getting into additional markets. We've been consistent about it from the start," says Smith. "Time will tell if we are right or not."

And though Ciena gave investors little to cheer about in the near term, some on Wall Street say there's eventually going to be a big-bang quarter when some of these orders come through.

"Ciena is in a better position now than they were when they traded for $100 a few years ago," says one New York hedge fund manager who is long the stock. "Back then they only had optical. Now, they have optical along with [network] access and data equipment."

Yes, time will tell.