Fiber-optic supplier Ciena ( CIEN) likes the single life. But investors may not.

After months of speculation that a big telecommunication-equipment maker was almost on the verge of swooping down and snapping up Ciena, the Linthicum, Md.-based company disclosed plans early Monday to buy two young developers of the next generation of optical networking.

Ciena will pay $980 million in stock for Lightera, based in Cupertino, Calif., and Omnia, based in Marlborough, Mass.

Because of the dilution caused by the deal, Ciena now expects to break even in the fiscal year ending in October, compared with earlier First Call estimates of $27 million in profits, or 26 cents per share.

Says one trader who specializes in mergers, "You typically don't do a billion-dollar deal if you're about to be acquired."

That idea also filtered among quick-handed investors on Yahoo! Finance message boards. "I do not think CIEN is a buyout candidate anymore," wrote one individual, "riskaversedaytrader."

At midday, Ciena stock traded down 1 11/16 at 25 1/8 on heavy volume. A Ciena official declined to comment on merger possibilities.

Last summer, Ciena was on the verge of merging with Tellabs ( TLAB), a supplier of telecommunications gear. But just as the deal was about to conclude, Ciena lost a prospective contract with AT&T ( T), which sent its stock tumbling and helped derail the merger. Continued price competition from the likes of Lucent ( LU) and Alcatel ( ALA) has helped to erode Ciena's profits by 94% in the past year. As a result, Ciena shares are trading 70% below their high.

Since the summer's debacle, Ciena's stock has bounced to the mid-20s from a low of 8 in October. Its rise has been nursed by continued takeover speculation, including a rumor that cited networking giant Cisco ( CSCO) as an acquirer, and small signs of a turnaround in the company's fortune. Ciena has won business in Europe and shipped leading-edge products that left its rivals behind.

But today's acquisitions signal that Ciena is ready to go it alone.

Strategically, Ciena has leapfrogged into the next generation of networking. Its initial success with "wavelength division multiplexing" systems -- which enable an optical fiber to carry multiple light-waves -- has been dimmed by price competition. Lightera and Omnia, while still in development, will help launch it into the potentially more lucrative business of interconnecting and "switching" those light-waves.

"We have a complete optical network solution," CEO Patrick Nettles told reporters in a conference call Monday morning. While Lightera's product, for one, still performs some tasks electronically, it will help Ciena develop future networks that deal exclusively in light signals.

Analyst Bill Rabin with J.P. Morgan says Ciena is "positioning itself to leapfrog" Lucent and Nortel. "It's a bit early to call because none of these products works yet."

But not everyone is convinced. "Probably 50% of the stock price was takeover premium," says Mike Margolies, whose independent firm Avalon Research urged clients once again Friday to sell Ciena shares.

Margolies' firm, based in Boca Raton, Fla., had briefly recommended buying Ciena shares as they rose last fall. However, Margolies now says the price will fall to 20 as Ciena grapples with price competition in its core DWDM business, which packs an increasing number of light-waves into fiber-optic networks.

Monday's deals do not change Avalon's position. "How do we know that these new products are going to do anything for them?" says Margolies. "We don't know, and the execution risk is huge."