Like many fallen tech-sector darlings, Ciena ( CIEN) is finding that the harsh light of a downturn has a way of exposing flaws in a once-sparkling business.A blistering report Thursday from networking researchers at CIR -- a strategy firm, by the way, that used to pen mostly glowing praise for Ciena -- says the company's management has gone adrift, allowing the optical gearmaker to neglect its technological strengths and strain customer ties. The report, based on industry surveys and analysis, charges that Ciena has fragmented what once was a strong product strategy and, in the process, helped to undermine the company's commitment to critical gear at the heart of its customers' networks. Seems there's no shortage of critics when things are going poorly. Ciena, due to report second-quarter earnings in a week, has seen revenue slide some 90% in the past year and a half, as phone companies slash spending and demand dries up for highly advanced networking upgrades. And if the market itself weren't bad enough, critics like CIR say mismanagement has only made Ciena's squeeze even worse. Ciena rose 23 cents Thursday to $5.96.
SwingingWhile management second-guessing is very much the backlash of market disappointment, just as glorification accompanies success, the CIR report nonetheless takes a direct swing at Ciena CEO Gary Smith. Among the report's conclusions is that instead of veering from one hot product acquisition to another, Ciena would be better off with a steadier hand on the wheel. "They just need to relax and ride it out at this point," says CIR's Mark Lutkowitz, one of the authors of the report. "They accomplished something extraordinary. They were a startup that became successful. But now they are overly obsessed with the next quarter's numbers. "Getting
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Ciena's revenue downtrend
'Mad Scramble'But CIR is far from alone in questioning Ciena's vow to spend its way through the downturn by trying to acquire technologies that will add to its product offerings. The acquisition of ONI early in the year
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