Scott Moritz
Investors awaiting the next twist in 2003's great tech disconnect should tune in for tomorrow's briefing with Ciena (CIEN Quote - Cramer on CIEN - Stock Picks).
The Linthicum, Md., networking shop has been a prime beneficiary of Wall Street's renewed thirst for the high-risk growth plays of yesteryear. Ciena shares have surged 59% off their spring low, driven in large measure by the assumption that a reviving economy will at long last free corporate America to resume spending on communications gear. The company is due to post fiscal fourth-quarter results Thursday morning. But some tech watchers warn that Ciena's performance has yet to live up to its surging stock, and they see little sign that it will. Demand remains soft for the optical gear at the heart of Ciena's product line. And observers doubt that even an improving economy will boost sales of other products enough to drown out the sputtering sound at the company's core. "They've lost a lot of business, and they don't have whole lot going for them right now," says Telecom Pragmatics analyst Sam Greenholtz. "Like the others in this business, Ciena is redefining itself as more of a converged data equipment company." On Tuesday, Ciena slipped 15 cents, to $6.61.Reloading
Longtime fans will recall that Ciena once was the purest of the pure-play optical shops. That designation soothed investors by assuring them that network operators would always need the company's products, in thick times or thin. The thinking was that as networks inevitably convert from electronics to optics, Ciena's gear would sell, because it not only boosts capacity but also allows phone companies to squeeze more sales out of a line.| Downtrend Ciena's long slide |
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