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Does Ciena Have a Chance?

For instance, margins did pretty well, considerint they have come under increased competitive pressure. It seems that management understands the challenges that Ciena faces and seems to be making some good decisions. But I just don't believe its sustainable -- at least not in the long term.

Nonetheless, Gary Smith, Ciena's CEO had this to say about the peroformance:

"With 5% annual revenue growth and fourth-quarter financial performance in line with our expectations, we continued to significantly outpace the market and take share in 2012 despite the challenging environment. That momentum resulted in record order flow and year-end backlog. Customers require more network convergence with greater programmability to deliver more services, and we believe our portfolio is leading the transformation to next-generation intelligent networks."

Those are certainly some encouraging words. But I worry the headwinds are just too rough. Likewise, it seems that investors' expectations remain too high for a company that still operates at a loss. While growth can still come with the company's impressive technology, but a lot has to go right for Ciena to turn things around.

If Ciena can show that it can innovate and leverage its existing technological advantage to fight off pricing pressure, then it certainly has a chance. Too, with so much R&D spending of late, the company needs to show investors the fruits of their support. Until then, I just don't see how this stock makes sense right here - especially not with a P/E of 32.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Richard Saintvilus is a private investor with an information technology and engineering background and has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.
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