Bad news. Good news.

For the past two days, companies that sell optical networking gear have seen their stocks rise on each.

Today, networking equipment manufacturer

Ciena's

(CIEN) - Get Report

announcement that it beat earnings estimates by 3 cents a share and was upping revenue estimates for the year was helping tech stocks everywhere.

Ciena was soaring, trading up $15.44, or 20.1%, to $92.25.

Ciena's good showing was driving prices higher for other optical plays as well, many of which started rising yesterday as investors started seeking stocks that have been mercilessly beaten since the fall.

Salomon Smith Barney

analyst Timothy Anderson said in a note this morning that Ciena's results suggest that optical networking is on stable footing and may provide a boost for optical component maker

JDS Uniphase

(JDSU)

as well.

Certainly investors felt the same way, and not just about JDS.

JDS shares were up $4.88, or 11.8%, to $46.13 in recent trading.

Corvis

(CORV) - Get Report

was also trading higher, up 88 cents, or 5.3%, to $17.38. Cable and component maker

Corning

(GLW) - Get Report

also rose, trading higher $4.13, or 10.6%, to $43.03.

In its call this morning, Ciena executives stressed the robustness of the market for advanced optical networking products -- especially their own, of course. Carriers may be spending less money on capital expenditures, Ciena COO

Gary Smith

said, but they are spending a greater percentage of it on advanced networking.

That bullish-sounding outlook is combining with a dramatic drop in valuation that the stocks have taken since

Nortel's

(NT)

announcement last October heralded a slowdown. Since then, Ciena has lost nearly a third of its value. JDS has dropped about 54%, Corvis has slumped about 75% and Corning has been trimmed by about 57%.

All four of those optical plays also rose yesterday, despite JDS's comments the previous day predicting a weaker outlook; probably for very different reasons.

JDS and other optical systems sellers are dealing with an uncertain economy overlaying an inventory bubble that is cutting spending by their telecom carrier customers. Much of that has been priced into the stocks.

So, as one trader put it yesterday, two things were happening to send optical stocks higher. One is that investors are covering their short positions and the other was a gradual trend by individuals figuring that now is the time to buy.

"People are saying 'OK, these things are going to bottom out at some point, what's the risk, another 10%,'" he said.

The same trader, though, also pointed out that these moves were coming largely from individuals. Money from big mutual funds has yet to move in.