Optical/IP Networks

Ciena's Thrills and Spills

Ciena Corp. (Nasdaq: CIEN) shares have been given a quick and powerful roller coaster ride over the last few days.

Yesterday Ciena stock climbed 25 cents (10%) to $2.69 on heavy volume, apparently on rumors of a big-deal contract or acquisition. Those profits are headed back to the recycling bin today, though, with Ciena down 12 cents (4.5%) at $2.57 midday.

Maybe Light Reading can take some credit (or blame) for the upswing. One of the rumors circulating was that Ciena might get a piece of the $100 million contract from Google (Nasdaq: GOOG), an idea possibly sparked by the recent story outlining Google's optical network plans. (See Google's Own Private Internet.)

Yesterday's other theory was that Ciena was in play, with one potential acquirer being Corning Inc. (NYSE: GLW).

Neither tale rings true, according to Morgan Keegan & Company Inc. analyst Simon Leopold.

"Our channel checks suggest that neither is likely. Rather Ciena may ink a deal with Chinese vendor ZTE to distribute gear in China and perhaps other developing markets," Leopold writes in a note issued this morning.

The ZTE deal would involve Ciena's core switching and long-haul optical gear, possibly expanding later to include Ciena's other products, Leopold writes.

A ZTE partnership would be nice but lacks Google's glamour -- hence the drop in Ciena's stock. As for the Corning theory, Leopold says Ciena shows no signs of wanting to sell, and Corning wouldn't be an obvious fit anyway. "Corning's telecom strengths are in passive elements, fiber and connectivity, and we doubt there would be synergies with Ciena," he writes.

— Craig Matsumoto, Senior Editor, Light Reading

Pete Baldwin 12/5/2012 | 2:59:28 AM
re: Ciena's Thrills and Spills OK, what am I missing with the Corning-Ciena rumor?

Yes, it's not a hot one any more, and was probably one of those meaningless Wall Street synatptic hiccups, but still -- does anyone see any particular logic in such a pairing? Maybe there's something there that I'm not seeing.
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