Ready or not, it has begun.

Three years after tech stocks began their massive slump, investors have once again warmed to the very names that led the market to its blistering highs of the last century.

Sure, we've seen rallies come and go in recent years, and the current momentum could easily fade. But already there have been some startling gains by a few companies that just months ago were struggling to maintain their very solvency.

Stocks like those of optical-networking shops Nortel ( NT), JDS Uniphase ( JDSU) and Corning ( GLW) -- which peaked at $78, $140 and $108, respectively, in 2000 -- fell more than 90% before hitting bottom last fall. But since then, the stocks have revived dramatically. Nortel shares have risen nearly sixfold from their 48-cent low last year. JDS is up 200% and Corning is a 600% gainer since October, as the Internet gearmakers attract enthusiastic crowds again.

Whether it's a case of surplus investor money with no better place to go, or trust in stocks returning as fraud recedes, or even a fundamental belief that what goes down must come up, the cycle has turned decidedly positive. And just as Wall Street appears bound to repeat some of its old mistakes, a few people have shown that they are bound to try to avoid them.

In fact, as if to tap the brakes on the breakneck run-up, some analysts have recently slapped downgrades on outfits like Nortel and Juniper ( JNPR), whose revived valuation continues to provoke marketwide debate, but in any case can no longer be called conservative.

"It's not like 1999 all over again, but we are concerned that there has been a lack of attention lately on valuation," says RBC Capital analyst John Wilson. Last month, Wilson cut his rating on Nortel to neutral from buy while trimming Juniper to sell from neutral, as the two companies' stocks rose beyond his price targets.

Similarly, UBS Warburg analyst Nikos Theodosopoulos cut his Nortel rating to neutral from buy last month. Theodosopoulos had a $3.05 price target and instead of simply going along for the ride or even raising the target to accommodate the surging sentiment, he stuck to his plan.

"We had a price target on Nortel and the stock hit the price target. That led to the downgrade," says Theodosopoulos.

By last week, Lehman Brothers analyst Steve Levy had seen enough of the froth and downgraded four networking stocks to sell: ADC Telecom ( ADCT), Nortel, Sonus ( SONS) and Tellabs ( TLAB).

"These stocks are being valued using '1999ish' metrics such as high price-to-sales ratios and 'momentum'; neither is a method we are comfortable with, as our memories of the 1999/2000 valuation bubble are just too fresh," wrote Levy in his note on June 9.

Doubles, Anyone?
Tracking telecom stocks' rise off fall lows*
Company Recent Price Percent Change
ADC Telecom (ADCT:Nasdaq) $2.52 135%
Alcatel (ALA:NYSE ADR) 9.21 276
Ciena (CIEN:Nasdaq) 5.29 116
Cisco (CSCO:Nasdaq) 17.41 101
Corning (GLW:NYSE) 7.60 585
JDS Uniphase (JDSU:Nasdaq) 3.83 136
Lucent (LU:NYSE) 2.14 269
Nortel (NT:NYSE) 3.00 582
*52-week lows set on various dates in September, October. Source:

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