Tech stocks having regained a bit of their luster of late, investors anxiously await a progress report on one of the communications sector's bolder strategic gambles -- Ciena's ( CIEN) decision to keep spending as peers pare back.

As the Linthicum, Md., optical gearmaker presents second-quarter financial results Thursday morning, Wall Street will be listening for cues suggesting that the company's stay-the-course plan is paying off. Of particular interest will be details of the hard-won British Telecom ( BTY) contract and clues about potential future acquisitions.

Unlike its hobbled rivals Nortel ( NT) and Lucent ( LU), which have been waging a desperate race to shrink into a shrinking market, Ciena has taken a damn-the-red-ink approach in continuing to push for expansion. Ciena's nearly $2 billion in cash and investors' faith in its technology have helped the upstart acquire smaller competitors like ONI and WaveSmith, giving Ciena some compelling products beyond its core optical switching market.

As demand for optical gear began to dry up in recent years, Ciena opted to pursue other product markets rather than go down with the fiber-optic ship. "It's not a bad strategy from a management point of view," says J.P. Morgan Chase analyst Ehud Gelblum, who has a sell rating on the stock.

While no one's been getting rich buying Ciena stock lately, neither have the risks of the cash-incinerating plan pushed investors into mass flight. After an abysmal drop from their triple-digit highs of late 2000, Ciena shares have doubled off October's all-time low of $2.41. The stock rose 23 cents, or 5%, to $5.27 in midday trading Wednesday.

Chutes and Ladders

Ciena executives have made it clear that they are willing to take on several quarters of losses to ascend the networking-supplier ladder. But critics haven't been nearly as comfortable with the gushing red ink. They point out that the company's quarterly break-even revenue level is $200 million -- roughly three times recent sales levels.

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