Ciena Executing Well On Growing Opportunities In Telco And Data Centers

Ciena (CIEN) has been one of my preferred names whenever Wall Street skepticism starts ramping up and undermining the price, and the shares have chopped their way almost 50% higher over the past year and 70% over the past two years, handily outperforming rivals like Acacia (ACIA), Infinera (INFN), and Nokia (NOK) over those time periods. While I do think the valuation today is more demanding, or at least more reflective of Ciena’s strong execution and growing end-market opportunities, the share price isn’t unreasonable and this is absolutely a name to consider on pullbacks.

Read more here:
Ciena Executing Well On Growing Opportunities In Telco And Data Centers

Ciena Doing Its Part To Ease The Street's Concerns About The Growth Story

A handful of “surely the good times can’t last” downgrades pressured Ciena’s (CIEN) share price in late September, but the stock has since come back on renewed confidence that those good times actually can last a bit longer, as Ciena continues to gain share in optical systems and gain traction with its new offerings. Moreover, if the software business really is on a better growth trajectory, it will answer some of the concerns about that business and offer another driver of growth over the next couple of years.

The set-up going into 2019 isn’t perfect. Obviously the markets are jittery. On a more company-specific basis, there’s still some risk of disruption from new product introductions from Acacia (ACIA) and Infinera (INFN), as well as risks from service provider budget priorities and a possible slowdown in datacenter growth. Those risks don’t really faze me on a mid-term basis, but could create some choppiness on a month-to-month or quarter-to-quarter basis. Ciena sits toward the low end of my upwardly-revised fair value range, and I’d consider prices in the low $30’s (or below) to be solid buying opportunities for a company with good ongoing leverage to both service provider and datacenter spending.

Click here for more:
Ciena Doing Its Part To Ease The Street's Concerns About The Growth Story

Ciena Sliding A Bit As The Sell-Side Rebuilds The Wall Of Worry

Ciena (CIEN) has been on a roll. Revenue rose 12% in the fiscal third quarter (beating expectations by 3%), gross margin was stronger than expected, and the company has been on a multiyear market-share-building run in both its core WDM market and in webscale. All of that has fueled a market-beating 33% run in the stock over the past year, so of course now some eager beavers on the sell-side are trying to beat the rush and downgrade early.

Wait, what?

It’s not all that uncommon to see calls that otherwise might look bold come out around this time, as there’s not much else to talk about in the weeks before third quarter earnings, and there are some near-term drivers that could weigh on Ciena’s growth. How management sets expectations coming out of this next quarter will clearly be important, as the run in the shares has somewhat emptied the tank for positive drivers.

Read the full article here:
Ciena Sliding A Bit As The Sell-Side Rebuilds The Wall Of Worry

Ciena Converting Skeptics And Finding Its Groove

Ciena (CIEN) has been a patience-testing call at times, as the market has been unwilling to trust this optical equipment provider given a not-so-great history and reputation for its sector. While there are still too many subscale players in optical transport, Ciena is doing well on Tier 1 metro spending, growth overseas in markets like India and Japan, and data center growth. Margins are still a bit of a sensitive subject, but I think management has made a good case for why margins should rebound over time.

With the big post-earnings jump (up more than 10%), it's harder to call Ciena a bargain, though I don't think the upside is tapped out yet. I'm a little concerned that Ciena could disappoint on gross margins in the next quarter and shake some of this newly-won confidence, but this is definitely a name I'd look at again if it were to slide back into the mid-$20s.

Read the full article here:
Ciena Converting Skeptics And Finding Its Groove

The Ciena Roller Coaster Is Back In The Buy Zone

I’ve warned before that Ciena (CIEN) really isn’t a great buy-and-hold stock (unless you have a lot of patience…), and the past few months have backed that up. While the shares did well after my last write-up and a strong second quarter, the shares started to weaken in July with growing concerns about the near-term growth outlook pushing the stock back below $20 for a time.

The outlook for optical in 2018 is not particularly strong, with expectations for basically no growth in long-haul and concerns in metro that Verizon (VZ) spending has already peaked. While Ciena still has some company-specific drivers like its datacenter interconnect business, its new WaveLogic Ai chipset, and its growing software business, this company has long struggled to regain credibility from the Street and confidence in management’s long-term goals for revenue and margins.

With the shares back down in the low $20’s, I’m more bullish on Ciena. I believe you have to be careful with cyclical stories (and the 100G rollout is a cyclical driver), but I believe Ciena has taken a lot of smart steps to improve and expand its business, and I believe long-term revenue growth in the 4% to 5% range is attainable, supporting a double-digit FCF growth rate and a mid-$20’s fair value if management can generate modest margin improvement from here.

Read more here:
The Ciena Roller Coaster Is Back In The Buy Zone

Ciena Continuing To Execute Well In A Growing, And Perhaps Changing, Optical Market

Ciena (NASDAQ:CIEN) has done alright since I last wrote about the stock, with the shares up around 8% versus a 10% gain in the S&P 500, a 9% gain in Nokia (NYSE:NOK), and a slight decline in Infinera (NASDAQ:INFN), but this optical player remains a controversial and volatile name. Nobody seems to dispute that Ciena today is a stronger company both financially and competitively than it has been in a long, long time (if not ever), but some analysts and investors are still reluctant to trust that the optical equipment market has really changed and that these good times can last.

I hate "it's different this time" stories because in the vast majority of cases, it really isn't different, and investors go away with singed eyebrows. That said, telco metro deployments seem less lumpy than in past cycles, and the industry has benefited from consolidation. What's more, data center interconnect is a meaningful growth opportunity, and traffic growth seems well-supported by growing use of streaming services and increased fiber-to-the-home deployments.

Given the trends in both telco and non-telco spending, I don't think my long-term revenue forecast of 5% for Ciena is ridiculous or even all that ambitious, though I do have some concerns that the actual "flight path" along that trend line will be choppy. I'm a little more nervous about modeling double-digit FCF margins on a sustained basis, but Ciena management does seem to have the company in better shape. All told, if Cisco can, in fact, deliver 10% long-term FCF growth, a fair value in the mid-$20s is reasonable, and the shares hold some appeal here.

Read more here:
Ciena Continuing To Execute Well In A Growing, And Perhaps Changing, Optical Market

Ciena Starting To See Some Rewards

Having written that Ciena (NASDAQ:CIEN) shares looked like an interesting trade earlier this year, I'm pleased to see the 25% move since late March - a performance that doubled the NASDAQ over that time, not to mention it outperformed comps like Infinera (NASDAQ:INFN), Cisco (NASDAQ:CSCO) and Nokia (NYSE:NOK). Better still, at least some of this outperformance is supported by actual improvements in the underlying business, with the last quarter (the company's fiscal third quarter) showing an acceleration in revenue back to double-digit growth along with meaningful improvements in non-GAAP margins.

Looking ahead, Ciena should really start to reap the benefits from Verizon's (NYSE:VZ) 100G optical metro build-out in calendar 2017, and web-scale customers continue to sign up for the company's Wavecenter datacenter interconnect. On the "but" side, Nokia and Huawei seem to have really stepped up their competitive efforts in Europe, and I remain concerned about the feast-then-famine nature of the business. In terms of buy-and-hold long-term value, Ciena isn't nearly so appealing anymore, but valuation and sentiment on these shares have historically been very tied to near-term earnings momentum, so more aggressive investors may want to let this one continue to play out in their portfolios.

Continue here:
Ciena Starting To See Some Rewards

Seeking Alpha: Ciena: An Always-Volatile Play On Telecom And Data Center Spending

It seems like the only sure thing regarding Ciena (NYSE:CIEN) is that the shares of this optical networking equipment company will always be volatile. The shares have spent the last five years bouncing between the low teens and high $20s, with that range tightening up to $15 to $25 over the last couple of years. While the growth outlook for the company's 6500 and Waveserver platforms is strong on the basis of telecom/cable and data center spending expectations, Ciena has ample competition from the likes of Huawei, Infinera (NASDAQ:INFN), and Nokia (NYSE:NOK) and healthy margins and cash flows in this sector have never been particularly sustainable.

While Ciena's first quarter results and guidance weren't disastrous, they offer a reminder that the company's business is volatile and hard to predict, and that the Street seems to always hold these shares with one eye firmly fixed on the exit. A fair value in the low $20s and the potential to trade higher than that on "it's different this time!" enthusiasm if/when orders really start rolling in is a reason for more aggressive investors to consider the shares, but the volatility and the prospect of perpetually inadequate ROICs is going to be a bigger stumbling block for value/quality-oriented investors.

Continue here:
Ciena: An Always-Volatile Play On Telecom And Data Center Spending

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.

Read the full article here:
Ciena Goes Back Into The Penalty Box

Investopedia: Ciena On A Roll With Carrier Spending Picking Up

It looks like the good times have arrived for Ciena (Nasdaq:CIEN), as this optical telecom equipment company delivered another beat-and-raise quarter with its fiscal third quarter results. Although carrier spending is not uniformly strong, Ciena shares could move higher as telcos loosen up their purse strings and move forward with badly needed capacity upgrades.

Please read more here:
http://www.investopedia.com/stock-analysis/090413/ciena-roll-carrier-spending-picking-cien-csco-vz-cyni.aspx

Investopedia: If Alcatel Can Keep This Up, The Turnaround Can Work

These are still very early days, but if the second quarter is any sign, Alcatel-Lucent's (NYSE:ALU) latest restructuring efforts may bring this company (and stock) back into relevancy. There is still plenty than can go wrong, but the carrier spending environment is looking better by the month, and will likely put some significant tailwinds into Alcatel's sales. While I definitely missed out on the early jump in these shares, a pathway to $3.50 (or higher) for the shares is at least worth talking about today.

Please continue here:
http://www.investopedia.com/stock-analysis/073113/if-alcatel-can-keep-turnaround-can-work-alu-cien-csco-jnpr.aspx

Investopedia: Ciena And Carrier Spending - They're Baaa-aack

As much as I've thought (and written) that Ciena (Nasdaq:CIEN) was a good way to play the eventual recovery in carrier spending, I couldn't personally get comfortable enough the long-term financial numbers to buy the shares for myself. While that didn't seem so bad over the recent months as the shares lagged the broader market, today's big reaction to second quarter earnings is a little hard to swallow for those of us on the sidelines. The good news, though, is that it really does seem like carrier spending has come back, and with that Ciena shares still look underpriced.

Please follow this link for the full article:
http://www.investopedia.com/stock-analysis/060613/ciena-and-carrier-spending-theyre-baaaaaack-cien-infn-csco-alu-t-vz-cmcsa.aspx

Investopedia: The Street Seems All In On Ciena's Recovery

Optical networking company Ciena (Nasdaq:CIEN) reported sales below expectations and lowered its guidance for the fiscal first quarter ... so of course the stock is up about 2% (as of this writing) after the announcement. That's just part of the weirdness that surrounds providers of carrier equipment these days - while 2012 was a pretty rough year, analysts and investors expect big carriers like AT&T (NYSE:T) and Verizon (NYSE:VZ) to start spending again soon. Although Ciena is difficult to value today because of the uncertainty of the pace of the spending recovery, I still believe this is an interesting stock for aggressive investors thinking a few moves ahead.

Please continue to the full article:
http://www.investopedia.com/stock-analysis/2012/The-Street-Seems-All-In-On-Cienas-Recovery-CIEN-ALU-JNPR-INFN1214.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.

To read more, please click below:
http://stocks.investopedia.com/stock-analysis/2011/Ciena-Tries-To-Carve-Out-Another-Run-CIEN-ALU-S-T1213.aspx

Investopedia: Ciena - Performance From Margins Or Marginal Performance?

The communications and networking infrastructure space is sort of like a primetime medical drama. The patients come in riddled with holes or coughing up blood, they stabilize, they seem to get better, there's a sudden turn for the worse (usually about midway through), and then about twenty minutes of artificial tension as the outcome hangs in the balance.

Unfortunately for shareholders, there's nothing artificial (nor especially entertaining) about the travails and challenges for companies like Alcatel-Lucent (NYSE:ALU), Adtran (Nasdaq:ADTN), Infinera (Nasdaq:INFN), Finisar (Nasdaq:FNSR) or Ciena (Nasdaq:CIEN) these days. While the future of bandwidth demand has never looked brighter and customers are queuing up for new technologies in the 40G/100G category, inventory corrections, unstable order patterns and rampant competition have rippled through the sector for a while now.

The link below will take you to the full piece:
http://stocks.investopedia.com/stock-analysis/2011/Ciena---Performance-From-Margins-Or-Marginal-Performance-CIEN-ALU-INFN-FNSR-JDSU-CSCO-JNPR0905.aspx

Ciena's Second Act

Optical networking company Ciena (Nasdaq:CIEN) is, if nothing else, a survivor. Although Ciena is thought of as a classic tech-bubble stock, this one actually did not peak until late in 2000 - well after the peaks for rivals like Cisco (Nasdaq:CSCO), Alcatel-Lucent (NYSE:ALU) and the Nasdaq in general. Like Alcatel though, Ciena fell hard and fast as its customers dramatically over-spent on equipment and many went out of business. What remains to be seen is whether Ciena has the ability to produce a second act of profitability and growth. 

A Typical Tech Quarter ... More or Less  
Ciena's quarter was not all that different from many others in the tech space. Revenue growth on an annual basis looked very strong (up 137%), while sequential growth was more moderate (up 7%). More specific to Ciena, the company's organic business was rather soft, and growth was really driven by the MEN business acquired a little while ago from Nortel.

Profitability was a mixed bag. Although analysts seem relatively pleased with the company's gross margin, the company nevertheless saw this profitability metric drop on both an annual (down 120 basis points) and sequential (down 150 basis points) basis. As for operating income, there wasn't any - the company had an operating loss this quarter, last quarter and in the year-ago quarter.

One point of note is the company's SG&A spending for the quarter. On one hand, this is a company that pays salespeople for orders and the jump in sales/marketing spending could be seen as a sign of more revenue on the way. On the other hand, "general and administrative" expenses basically tripled from the year-ago level, so it may be that the company is just spending more overall. (For more, see Fundamental Analysis: The Income Statement.)

Please follow the link for the full piece:
http://stocks.investopedia.com/stock-analysis/2010/Cienas-Second-Act-CIEN-CSCO-ALU-TLAB-INFN-T-CLWR1214.aspx