And the beat (make that downbeat) goes on, at least when it comes to stocks connected to the networking and optical sectors. Last week, the bad news came from

Nortel

(NT)

. This week, it's

Cisco

(CSCO) - Get Report

.

Investor confidence in the most high tech of tech sagged following a report this morning from

Lehman Brothers

that cut networking giant Cisco's 12-month price target to a range of $60 to $65 from $90. Cisco was down 5.6% to $47.81 and was the most active stock on the

Nasdaq today.

Why the about face? Lehman predicted a slowdown of the growth rate for company telecom service spending, which will directly hit Cisco's bottom line. That was hardly what investors wanted to hear after Nortel last week

warned of a slowdown in spending by its optical customers. Lehman, however, kept its buy rating on Cisco and said the company maintained its premier position as a vendor.

Optical stocks were priced to perfection and optimism about the growth of fiber optics has been so high that companies in this area have essentially escaped serious scrutiny of their valuations. At least until recently. In the wake of Nortel's warning, and now the Lehman Brothers report on Cisco, any bad news is going to make these and related companies fall.

So it's little surprise that fiber optic system producer

Ciena

(CIEN) - Get Report

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was trading down 12.3% to $91.56. Other optical makers and networkers dropped in synch, including Friday's hero,

JDS Uniphase

(JDSU)

. It was trading down more than 7%, while its merger partner,

SDL

(SDLI)

, was off 11.6%. JDS on Thursday said its

earnings beat Wall Street targets -- and, better yet, it increased earnings and revenue targets. The company had climbed on the news and helped boost the market on Friday.

Juniper Networks

(JNPR) - Get Report

was also off, trading 7.7% lower.

Analysts said many of the optical stocks, which had enjoyed high valuations and had lately been the leaders of the tech sector, would now be subject to a lot more scrutiny. "The negative news has become more important than the positive news," said David Toung, analyst with

Argus Research

. "I think the events of Nortel and the reports of a slowdown of capital spending have a lot of people worried."

TheStreet.com's

Justin Lahart wrote a

separate article that looks at how stocks are struggling to overcome a slowdown in equipment spending.