Yesterday Ciena reported earnings that were in line with a guide down in Feb. 21. The reaction to this news pushed the stock of Ciena down 23% through March 6, the day before they reported. March 7, Ciena Guidance was good as they said Telco spending is improving and now are looking for revenue to fall into a midpoint of about $442.5m.
What we know.
Ciena is at top 3 OEM for Oclaro as reported in Oclaro's quarterly report(see older posts). In a research report by Credit Suisse published this morning that Ciena's strength is coming largely from Ciena position in 100/G at Verizon.
"Verizon appears to be a source of particular strength for Ciena’s
100Gbps system as Verizon is building out 100Gbps WDM routes connecting all major
cities in the United States this year in addition to the dozen or so routes that Verizon built
using Ciena’s 100Gbps platform in Europe last year. We expect Ciena to continue to be
the primary vendor for this build out and note that to date Ciena has been the exclusive
vendor."
Oclaro has many catalysts on the horizon that make $6.50 an easy target for shares. I expect them to announce the sale of a manufacturing facility any day now that will add $30m cash to the balance sheet worth about a $0.50 cent move higher on this news depending how far it runs up in reaction to the Ciena news. Oclaro's guidance last quarter was, I believe, conservative. As a result, I expect them to beat the high side of guidance and guide somewhere to 120m for June quarter and this could move shares into the low teens.
Jwells
