Seeking Alpha: Ever-Volatile Ciena Doing Well In 100G

Optical equipment company Ciena (NYSE:CIEN) has been a pretty good stock for traders, as the market runs hot and cold on the shares in response to capex expectations from Verizon (NYSE:VZ) and AT&T (NYSE:T) and intermittent concerns about competition. Through this process, Ciena has done well for itself in the 100G space, and winning a spot at the table with Verizon for its 100G metro deployment was a solid, if widely expected, win. Looking ahead there should be plenty of 100G sales, as carrier deployments will go on for a while, and Ciena arguably doesn't get enough credit for its success with Web 2.0 companies like Google (NASDAQ:GOOG) and Facebook (NASDAQ:FB).

Credit from the market is a tough thing to evaluate, though, and I don't believe the market is significantly undervaluing these shares today. Sustained double-digit FCF margins would support a fair value in the high $20's, but Ciena has never been able to do that and there are risks that the overall market growth will disappoint the bulls. Given those risks, a mid-$20's fair value is probably more realistic today but I'm favorably biased on this stock and I think Ciena could surprise with additional wins and better margin leverage.

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Ever-Volatile Ciena Doing Well In 100G

Seeking Alpha: Finisar Taking Its Lumps

Optical components manufacturer Finisar (NASDAQ:FNSR) has become a miserably bad call for me. Six months ago, I wrote that I would never want to hold Finisar for the long term and that I thought the shares were already trading at their inherent DCF-based value (with some bullish assumptions). I also thought, though, that momentum in the datacom business would support the business in the near term and lend strength to the shares. With the stock down more than 20% over the past six months, though, that clearly has not happened.

Along with fellow component manufacturer JDS Uniphase (NASDAQ:JDSU) and telecom equipment companies like Alcatel Lucent (NYSE:ALU) and Ciena (NYSE:CIEN), Finisar is contending with weaker than expected telecom carrier spending. Finisar is also seeing lumpier datacom spending from Web 2.0 customers and weakening growth in wireless transceivers while pursuing lower-margin sales into the Chinese telecom market.

I didn't see a lot of intrinsic value in the shares six months ago, and I don't see much now either given the company's lower guidance. I can also construct a bearish scenario that would see the company retest the $11-$13 range. Finisar is part of a volatile sector and is heavily shorted, though, and the shares could bounce if business conditions improve and the company delivers beat-and-raise quarters. I do think that Finisar has good technology in 40G/100G transceivers and transponders, as well as opportunities with its wavelength selective switches and ROADM cards, but this is a pretty tough sector for value-oriented buy-and-hold investors like me.

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Finisar Taking Its Lumps

Seeking Alpha: Ciena Goes Back Into The Penalty Box

When I cooled on Ciena (NYSE:CIEN) six months ago, my concerns were largely about valuation and the risk that market expectations were getting a little hot for a company that still had some real challenges in boosting margins (not to mention competing with the likes of Huawei, Alcatel Lucent (NYSE:ALU), and Infinera (NASDAQ:INFN)). I didn't expect a 23% fall, though, and the reaction to Ciena's disappointing fourth quarter guidance seems a bit much.

To buy Ciena today I think you need to have confidence that the upgrade cycle is going to last at least five years, that non-traditional customers (like Web 2.0 companies) will continue to represent a growth opportunity, that Cisco's (NASDAQ:CSCO) efforts to move down the stack will only go so far, and that Ciena can leverage the Ericsson (NASDAQ:ERIC) partnership to improve its OUS share and its overall margins. That's a lot to digest, and I don't want to suggest that you have to accept all of that to be more bullish than the Street, but if Ciena can reach (and keep) a double-digit FCF margin and generate long-term revenue growth in the mid-single digits, these shares are getting interesting again.

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Ciena Goes Back Into The Penalty Box

Seeking Alpha: After A Solid Rebound, Ciena Isn't Quite As Appealing

Back in mid-December, I thought Ciena (CIEN) looked like a good buy-the-dip opportunity. Even with the post-earnings pullback on Thursday, the shares are still up about 15% since that piece, nearly tripling the return the S&P 500. I am bullish about the company's partnership with Ericsson (ERIC) and its prospects for growing its global 100G share. At the same time, though, that is going to be a long-term process and I don't see as much undervaluation in the shares as I did three months ago.

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After A Solid Rebound, Ciena Isn't Quite As Appealing

Investopedia: Another Revision Doesn't Make It Easier To Like Juniper

I thought that 2013 could be the year where long-suffering stocks like Ciena (Nasdaq:CIEN) and Juniper (NYSE:JNPR) earned a little love from the Street. So far that hasn't been the case, though Cisco (Nasdaq:CSCO) and Ericsson (Nasdaq:ERIC) have shown some signs of life.

The real question for Juniper remains what it has been for some time now – can the company take/regain share from companies like Cisco and Alcatel Lucent (NYSE:ALU) in routing, gain share in switching, and stabilize the security business? Although carrier spending has been looking and sounding a little better, another downward revision in Juniper's guidance makes it harder to step up and take a chance with this stock.

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Investopedia: Nokia Still Straddling Fault Lines

Roughly 18 months into his tenure as the CEO of Nokia (NYSE:NOK), Stephen Elop hasn't yet proven much of anything about the future of this former mobile device leader. The company has done a better-than-expected job of cutting costs and its Nokia Siemens Networks joint venture is looking a lot better, but the company continues to lose mobile device share at an alarming rate. While the company's ongoing existence as a going concern is arguably not an issue, there's a great deal more to do before the company can be considered a real turnaround stock.

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Investopedia: ADTRAN Looks To Rebound From A Pretty Miserable 2012

It's almost cliché to talk about how bad of a year 2012 was for communications equipment vendors dependent on American and European carrier spending. With core broadband access product sales down 13% in 2012, ADTRAN (Nasdaq:ADTN) definitely found itself among the laggards, with shares down more than 30% over the past year and well below the S&P 500.

But 2013 is a new year, and hope springs eternal in the hearts of tech investors. While investors should not discount the competitive risks from rivals like Calix (NYSE:CALX) and Alcatel Lucent (NYSE:ALU), there is reason for at least cautious optimism that carrier infrastructure deployments will lead to better results for ADTRAN. At a minimum, it certainly doesn't seem like the Street has priced this stock for particularly breathtaking performance.

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Seeking Alpha: BroadSoft Broadsides Investors

Growth stocks have a relationship with Wall Street not unlike that between mobsters and their "clients" - namely, "give us the growth … or else." Unfortunately for BroadSoft (BSFT) investors, the company had little choice but to go with "or else" with its guidance for 2013. As revenue growth appears to be flattening, the biggest question now is whether it's a pause or the warning sign that the BroadSoft growth story isn't what investors thought it was. While I'm inclined to believe that this is a pause and not a stop, investors need to appreciate the above-average risk and volatility in this name.

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BroadSoft Broadsides Investors

Investopedia: The Uneven Consequences Of Corporate Misbehavior

Who, or what, you are, really does seem to matter in America. While corporations may be techno-legally "people," they are seldom treated as harshly as private citizens when it comes to breaking the rules. There are many reasons why you may hate big business. A cynic may say that this is because of the huge contributions they funnel to politicians, while a more charitable argument could be made that the jobs and tax revenue created by corporations create the possibility of substantial collateral damage. Whatever the reason, given the differences in prosecutions and punishments between street crime and corporation crime, it is worth asking if governments really care about the misbehavior of corporations.

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http://www.investopedia.com/articles/economics/12/governments-care-corporate-misbehavior.asp

Investopedia: Can Powerwave Live To Fight Another Day?

Deep turnarounds can deliver major multi-bag returns to daring investors, but the reality is that many of these stories spiral down instead of turn around. Powerwave Technologies (Nasdaq:PWAV) is certainly in deep trouble; not only has carrier spending dropped significantly in recent quarters, but the company is facing competition from commodity RF amplifiers. While the potential returns from a Powerwave turnaround could indeed be massive, investors have to weigh this against the real possibility that Powerwave cannot turn itself around fast enough to overcome its debt.

Follow the Trend  
Companies like Alcatel-Lucent (NYSE:ALU), Ericsson (Nasdaq:ERIC) and Nokia-Siemens have certainly been hurt by the recent slowdown in carrier spending, but the impact has been even more serious at Powerwave. From $170 million in quarterly revenue for the period ending July 3, 2011, revenue has plunged to $60 million.

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Investopedia: PCTEL May Be Signaling "Buy"

Investors aren't going to find too many small companies with PCTEL's (Nasdaq:PCTI) record of returning cash to shareholders. In addition to paying a special dividend a few years ago, the share count here has declined about 20% since 2007. All of this has been achieved despite a clear breakout product and the fact that revenue for 2011 was more than 10% below the level back in 2006.

Unfortunately, value-oriented tech companies seldom get their due. While PCTEL has a decent business in antennas and mobile network test equipment, it's going to take more than that to make the shares really exciting. Luckily for investors, there is an iron in the fire that just might make this a more interesting name in the future.

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http://stocks.investopedia.com/stock-analysis/2012/PC-Tel-May-Be-Signaling-Buy-PCTI-HRS-ALU-CHL0315.aspx

Investopedia: GSI Technology Needs A Healthier Carrier And Networking Market

Having few competitors is a mixed blessing in technology. In the case of static random access memory (SRAM), GSI Technology (Nasdaq:GSIT) is one of the few companies still involved in the industry, but investors ought to be cautious in committing to a market that companies like Samsung and Sony (NYSE:SNE) chose to exit. While there is still growth potential here, particularly if carrier demand rebounds, there may not be enough growth to really get the Street excited about this name again.

High Performance, but a Small Market  
SRAM offers several technical and performance advantages over DRAM when it comes to applications like routers, switches and base stations, and these chips have found their way into many high-performance applications in networking, telecom, military and medical markets. Unfortunately, as alternatives have improved, the addressable market has shrunk and now arguably stands below $1 billion.

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Seeking Alpha : Should Investors Add Adtran After Fourth Quarter Earnings?

Such is the state of business for companies that supply equipment to carriers like Verizon (VZ) like AT&T (T) that not missing numbers is greeted with the enthusiasm usually reserved for beat-and-raise stories. Certainly these are challenging times for last-mile equipment vendor Adtran (ADTN), but increased home and business demand for broadband and ongoing wireless backhaul buildout could spell better times ahead.

Q4 Results - Good Enough Will Do
Adtran's results weren't great, but the performance at other carrier equipment vendors like Alcatel-Lucent (ALU) and Acme Packet (APKT) wouldn't give any reason to expect them to be so. Nevertheless, a sequential revenue drop of 9% (and a 6% gain from last year) was good enough to meet expectations.

Adtran saw year-on-year growth in both broadband access (up 49%) and internetworking (up 37%), but sequential comparisons were not so exciting (down almost 15% and up about 2%, respectively). Optical access was outright bad, though, as sales dropped 17% from last year and 25% from the third quarter.

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Should Investors Add Adtran After Fourth Quarter Earnings?

Investopedia: Service Providers Disconnect Juniper's Momentum

While tech stocks often trade in tandem when there's news from the major players, not all networking is the same. In other words, the problems that Juniper Networks (NYSE:JNPR) is now facing are not necessarily directly translatable to Cisco Systems (Nasdaq:CSCO) or smaller vendors like F5 Networks (Nasdaq:FFIV) and Riverbed Technology (Nasdaq:RVBD). For Juniper, as for Alcatel-Lucent (NYSE:ALU) and Acme Packet (Nasdaq:APKT), the story today is about weak spending in North America from the large service providers. (For more, see Earning Forecasts: A Primer.)

A Disappointing End to the Year  
Juniper announced January 9, 2012, that fourth quarter results were not going to meet Wall Street expectations. Instead of the average estimates of $1.19 billion in revenue and 34 cents in earnings, Juniper announced that results were going to be on the order of $1.11 billion to $1.12 billion and 26 cents to 28 cents.

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http://stocks.investopedia.com/stock-analysis/2012/Service-Providers-Disconnect-Junipers-Momentum-JNPR-CSCO-FFIV-HPQ-ALU0111.aspx

Investopedia: AT&T's Bold Bid For T-Mobile Ends In Failure

Maybe there's some truth to the aphorism "nothing ventured, nothing gained", but AT&T (NYSE:T) has come up snake-eyes on its latest roll of the dice. In what had become not much of a surprise at all, AT&T announced Monday evening that it was abandoning its bid to acquire Deutsche Telekom AG's (OTCBB:DTEGY) U.S. operator T-Mobile because of what increasingly looked like insurmountable regulatory objections.

The News  
AT&T is abandoning its bid to combine with T-Mobile and become an even larger player in the U.S. mobile services market. This outcome is not all that surprising. Apart from the howls of self-interested parties like Sprint (NYSE:S), ample regulatory objections and blockades were raised to this deal. There's no doubt that it would have represented considerable consolidation (blending the No.2 and No.4 providers), though T-Mobile's position as something of a weak sister in the industry may have led AT&T to believe it could get the deal done. (For related reading, see How To Pick The Best Telecom Stocks.)

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http://stocks.investopedia.com/stock-analysis/2011/ATTs-Bold-Bid-For-T-Mobile-Ends-In-Failure-T-VZ-S-ALU-DISH-CLWR-DTEGY1220.aspx

Investopedia: Ciena Tries to Carve Out Another Run

Investors have been waiting a while to see a sustained rebound in shares of optical networking specialist Ciena (Nasdaq:CIEN). Although this one-time tech darling has given bargain-hunters a few good recovery pops in recent years, the shares are just a pale shadow of what they used to be. Unfortunately for investors, it is hard to see how the company will build enough of a technology buffer, to ever again reap the sort of margins that will make this a winning tech stock holding.

A Decent End to the Fiscal Year 

Although Tier 1 telecom spending has slowed recently, Ciena still managed to produce a decent result. Revenue rose almost 5% on a sequential basis and 9% on an annual comparison, as good performance in optical transport offset flat results in switching and pronounced weakness in CESD. Looking at the major customer data, it looks like AT&T (NYSE:T) has pulled back on CESD spending and Verizon (NYSE:VZ) has not dramatically picked up its orders.

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Investopedia: The Investment Prospects For Nokia

As technology moves from one generation to the next, the old champions are frequently left behind with only fading memories of former glories. That has certainly proved to be the case with Nokia (NYSE:NOK), as this one-time growth champion has become a lagging dotard in the cellphone market that it still, somehow, leads. With new management and a new operating philosophy in place, including a far-reaching partnership with Microsoft (Nasdaq:MSFT), it is time to reconsider the investment case for Nokia.

The Problems Have Been Many
Although much is made of Apple (Nasdaq:AAPL), burying Nokia under the avalanche prompted by the iPhone, the fact is that Nokia was struggling long before that. Consider any recent innovation (going back to the clamshell design), and Nokia was almost always one of the last to be on board and usually not a good representation of the breed. In fact, Nokia couldn't even stay ahead of the likes of Research In Motion (Nasdaq:RIMM) or Palm as the cell phone world changed.


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http://stocks.investopedia.com/stock-analysis/2011/The-Investment-Prospects-For-Nokia-NOK-MSFT-RIMM-AAPL-GOOG-ALU-SI-ERIC1129.aspx

Investopedia: Aruba Still A Growth Story In A Growth Market

 Even if consumer demand for smartphones and tablets has started to disappoint lately, there is little question that it is still a major emergent trend in enterprise IT. As Aruba Networks (Nasdaq:ARUN) is built upon facilitating wireless access to network resources, it is a good pure play on this secular growth. While worries about enterprise IT spending and reinvigorated competition are relevant in the context of a robust valuation, this is still an interesting tech growth story.



A Solid Start to the Fiscal Year
Aruba is getting its fiscal year off to a solid start. Revenue rose 44% in the quarter and 5% on a sequential basis. Profitability is also fairly good. Gross margin did worsen from last year ((whether generally accepted accounting principles (GAAP) or non-GAAP)), but improved decently on a sequential basis. Operating income was more uniformly positive - the year-on-year GAAP increase being so large as to almost be irrelevant, while the company added almost a point and a half to non-GAAP operating margin on a sequential basis. (To know more about income statement, read: Understanding The Income Statement.)


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http://stocks.investopedia.com/stock-analysis/2011/Aruba-Still-A-Growth-Story-In-A-Growth-Market-ARUN-CSCO-MERU-JNPR-HPQ-MSI-ALU-AAPL-ZTCOY1123.aspx

Investopedia: Altera's Growth Story In A Pause

As wireless companies seem committed to never-ending capital spending and network upgrades, it would make sense that key suppliers to this market would be strong secular growth stories. Add a product/technology transition story to the mix and you have a pretty interesting growth story. That's the very short version of the buy thesis on chip company Altera (Nasdaq:ALTR) and while it's a compelling story, it is not without some risks and bumps in the road.

A Tough Third Quarter 

Both Altera and rival Xilinx (Nasdaq:XLNX) told us all that this would be a bad quarter, but results at Altera were actually a little worse than expected. Revenue fell almost 1% from last year and almost 5% from the prior quarter, as telecom spending, which typically makes up close to half of Altera's revenue, dropped sharply and revenue fell almost 13% sequentially. The company's industrial business was not good either, down about 7%, and though the networking/computing segment was strong, up over 30%, it's relatively small.

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http://stocks.investopedia.com/stock-analysis/2011/Alteras-Growth-Story-In-A-Pause-ALTR-XLNX-LSCC-CAVM-TXN-PWAV-BRCM-T-ALU1025.aspx

Seeking Alpha: Powerwave May Fade To Black

Wireless equipment maker Powerwave (PWAV) has given its investors quite the thrill ride over the last four years, but the latest dive may have investors and analysts wondering if this company can ever achieve a sustainable base of business. Bad quarters happen to every company eventually, but very few established companies miss their revenue target by 50% and investors should ask themselves whether the sizable return potential here is still worth the ongoing risk and volatility.

A Terrible Third Quarter
After the close Tuesday, Powerwave announced that it was going to report a horrible third quarter result. Citing significant slowdowns at AT&T (T) and T-Mobile and disruptions in the Mideast and North Africa tied to the political upheavals, management announced that revenue would come between $75 million and $79 million – more than 50% shy of the average analyst estimate of $168 million.

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Powerwave May Be About To Fade To Black