Pat McKeough responds to many personal questions on specific stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions.
Our Inner Circle Q&A frequently features questions on tech stocks. This past week, one Inner Circle member asked about a tech stock that has recently had a surge in its share price. Its unique software for submarine networks has helped this stock rise and Pat assesses whether it can sustain its momentum.
Q: Pat: Any thoughts on Ciena Corp? Thanks.
A: Ciena Corp., (symbol CIEN on Nasdaq; www.ciena.com), makes networking equipment that lets phone carriers transmit files that contain large amounts of data, like video. AT&T and Verizon are among the company’s major customers.
Ciena’s shares have moved up over 35% since the end of May after the company reported better-than-expected results in its latest quarter.
Excluding one-time items, Ciena earned $0.04 a share in the three months ended April 30, 2012, compared to a loss of $0.24 a share a year earlier. The latest figure was well ahead of the consensus estimate of a $0.03-a-share loss.
Revenue rose 14.3%, to $477.6 million from $417.9 million. That was above the consensus revenue estimate of $447.0 million.
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Tech stocks: New network software has “self-healing capabilities”
Ciena’s new OneConnect Intelligent Control Plane software has “self-healing capabilities” that should make networks more reliable. That’s especially valuable for submarine networks, because this feature reroutes services around failures or damage to fibre-optic lines.
Ciena’s current submarine contracts include the LION (Lower Indian Ocean Network) cable project in Africa, which joins Kenya to the island of Mayotte, in the Mozambique Channel, as well as Madagascar, Reunion and Mauritius; and the Japan-U.S. Cable Network, a consortium of carriers that is upgrading its trans-Pacific submarine network, which spans close to 23,000 kilometres from the U.S. to Japan.
The Japan-U.S. Cable is backed by 26 members, including leading global service providers like Verizon Business, AT&T, BT, Sprint, CenturyLink, Cable & Wireless Worldwide, Tata Communications, SingTel, Softbank Telecom, France Telecom, and Telstra.
In the most recent Inner Circle Q&A, Pat looks at whether Ciena’s new OneControl software will give the company a significant advantage in a very competitive market. He also examines whether its share price can keep rising in the face of unsettled European markets and lower spending by U.S. telecommunications firms. He concludes with his clear buy-hold-sell advice on the stock.
COMMENTS PLEASE—Share your investment knowledge and opinions with fellow TSINetwork.ca members
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