The early returns are in, and analysts on Wall Street aren't exactly overjoyed by Ciena Corp.'s (Nasdaq: CIEN) latest acquistion spree.

Earlier in the week Ciena agreed to deals to buy Catena Networks Inc. and Internet Photonics Inc. for a combined price of about $636 million in stock (see Ciena Buys More Than Catena ).Catena makes a broadband digital loop carrier product, and Internet Photonics makes a line of access transport gear -- gear that allows new services to ride on separate wavelengths alongside existing Sonet/SDH services and allows the reuse of lit as well as dark fiber (see Integrating WDM & Sonet/SDH).

This makes a total of of six acquisitions Ciena's made in the last four years. (Here's a bonus trivia question: Can you name them all? Answers below). The bottom line is that the financial world doubts how Ciena will manage the new horses in its stable. Unlike many larger incumbents such as Nortel Networks Corp. (NYSE/Toronto: NT) and Cisco Systems Inc. (Nasdaq: CSCO) -- which have returned to profitability and have stabilized their considerable cash positions -- Ciena is still losing money.

"Why is it that the last two times Ciena has announced a bad quarter they also announce an acquisition?" asks one analyst, whose face was covered in tea leaves."We believe Ciena is trying to buy revenues, but note that Internet Photonics has never been profitable and we believe Catena only recently showed its first quarter of profitability," writes Alex Henderson, managing director for Smith Barney Equity Research.Henderson, who rates Ciena a Sell, says the company should be first and foremost concerned about reducing its burn rate, as its cash is starting to dwindle. "At current burn rates Ciena has just over three years of cash remaining on its balance sheet," writes Henderson. "We are concerned that the overall market may not strengthen enough and Ciena's competitive position may not be strong enough to significantly stem the burn over the near term."

Other financial analysts share the concern, seeing Ciena take on yet more acquisitions before it has integrated those such as WaveSmith.

"Ciena faces execution risk in integrating acquired businesses and may be spreading itself too thin penetrating new end markets," writes UBS Investment Research analyst Nikos Theodosopoulos, who points out Ciena likely won't be profitable until fiscal year 2006.

Compounding those concerns is the fact that Ciena's extended buying binge hasn't done much to supply growth. The company's difficult 2000 acquisition of Cyras for next-generation Sonet equipment hasn't resulted in any big deals (see Ciena To Buy Cyras for $2.6 Billion, Ciena Grinches Cyras Execs , and Ciena's K2: What Problems?). And despite its acquisition of ONI Systems, Ciena still trails metro DWDM market leaders Nortel and ADVA AG Optical Networking (Frankfurt: ADV). (See Ciena Looking to Merge Away Misery and ONI/Ciena: In Counseling?.) Analysts point out as well that after only three quarters in the Ciena stable, WaveSmith's data-networking sales experienced a quarter-to-quarter decline (see Ciena Nabs WaveSmith and Will WaveSmith Execs Stick Around?)."Adding additional disparate product lines may also add to the overall level of uncertainty for forecasting and managing the business," writes Steve Levy, an analyst for Lehman Brothers. "The margin for error in management's guidance may continue to rise as more new product lines are added."

Oh yes, and don't forget Akara -- Ciena is also trying to penetrate into storage-area networking gear (see Ciena Loses More, Spends More).

After a run up last week, Ciena shares have come back to Earth, giving up 24 percent of their value since the close of trading on Monday. Shares were down $0.15 (2.48%) to $6.02 in afternoon trading on Friday.

— Phil Harvey, News Editor, Light Reading