Long term, CIEN probably is a good buy here.  Short term??? Hard tellin' with this guy in charge.

With the 5G cycle (5 years or so) in front of it, it is

Jon (and lt cap),

Yeah, that's why I bought a bit more CIEN today at 39.79. It's falling in sympathy with CSCO, which is down 8% on earnings that beat everything slightly to moderately. But their

guidance was below expectations. And although China, and the expected slowdown in revenue from that area is (IIRC) expected to be down around 3% in the coming quarter,

the market is reacting as if the sky is falling.

So, the question is: Is it, as the market seems to think, just the beginning of a continuing stream of poor results because of the trade war with China, or, is it an over-reaction

by the market, and thus a buying opportunity?

Does anyone have an idea of how much China exposure CIEN has? I *thought* they primarily sold to American companies, like ATT. Chime in if you have a guess, thanks.

Earnings on CIEN is due on Sept. 5th.

 

You could sell calls on those shares. Sep 6 45's are selling for 1.20+ right now. If they get called you make 16%. If they don't you just got $1.20 protection in terms of cost average.

Ok, I just bought 500 more shares CIEN and sold Sep 6 calls at 45.5 for $1.06.  10 contracts total. 

The next Fed meeting is mid-Sep so nothing there before Sep 6, so good earnings should push the stock and I am ok with them getting called for a slightly over 10% gain or holding if not. Should have been on the ball when it dropped below 40, so good job picking up shares Jamok.

Jon,

Thanks for the kudos, but I went 'light' in only buying 125 shares. However, in the coming days, (maybe as early as tomorrow, if CIEN stays around these levels I plan to place a bet by

buying more underlying shares and then deciding on a strike price when buying covered calls. I *think* CIEN messed the bed only once in the last many CC's. My only question, asked

some time ago, is whether they are primarily a supplier to American co's such as ATT, or whether they have a dog in the fight with China.

Regardless, it's 'that time' again with CIEN, and I think it's a chance worth taking.

baltimoresun.com/maryland/anne-arundel/bs-bz-ciena-earnings-20181213-story.html

 

Maryland  Anne Arundel

As global demand spurs strong results, Hanover-based Ciena could benefit from China tensions Lorraine MirabellaContact ReporterThe Baltimore Sun

A Hanover-based networking technology company may be well positioned to take advantage of rising trade tensions with China, especially following the arrest of an executive of its big Chinese rival in the global market.

Ciena Corp. has become the world’s biggest player in optical connectivity, providing the backbone for internet and mobile connections, but it decided years ago to largely bypass the Chinese market. It does not sell to major telecommunications carriers in China and has only a small business there with Internet companies.

That’s partly because of Huawei, China's largest private company, which is second only to Ciena in terms of global market share in the optical transport space.

“We do not really participate in the direct China market,” Ciena CEO Gary B. Smith said in an interview Thursday. “It’s one of the decisions we made many years ago. So we’re not exposed to some of the trade tensions that other folks are.”

Ciena turned in strong financial results Thursday for its final quarter and fiscal year, grabbing market share from competitors and benefiting from “insatiable” global demand for mobile and internet connectivity.

The company’s growth has been especially strong over the past year and a half as more telecommunications carriers and internet companies such as Google, Apple, Facebook, Microsoft and Amazon have sought network systems providers with leading technology and strong balance sheets, Smith said.

“The dynamics that are driving it are just an insatiable demand for connectivity in its various forms,” Smith said.

Ciena’s sales soared more than 20 percent to $899.4 million for the three months that ended Oct. 31. Annual sales grew more than 10 percent to $3.09 billion. The company says it’s benefiting from innovation in technology that it owns and an understanding of market trends, allowing it to outperform the market and take share from rivals.

On an adjusted basis, Ciena reported income of $81 million, or 53 cents per share, up from $48.5 million, or 32 cents per share, beating Wall Street estimates. Analysts, who look at adjusted results, expected earnings of 48 cents on sales of $862.4 million.

Excluding adjustments, net income fell to $64 million, or 34 cents per share, compared with net income of $1.1 billion, or 7.32 per share.

Ciena’s shares rose nearly 9 percent in Thursday trading to $34.91 each.

One analyst said in a report earlier this month that Ciena is best positioned among makers of optical communications systems to withstand a Chinese backlash related to Huawei and trade tensions.

Huawei made headlines after its chief financial officer, Meng Wanzhou, was arrested in Canada earlier this month at the United States’ request. U.S. officials were seeking to extradite Meng in connection with allegations the company breached U.S. sanctions on Iran. Wanzhou was granted bail this week.

“Ciena benefits from a diversifying business,” wrote Simon Leopold, an analyst with Raymond James & Associates, in a Dec. 6 report. “Outside the U.S. and China (where Ciena has low exposure), competitors, suppliers, and market research commentary suggest healthy spending. We see Ciena as a share gainer with strength coming from customer diversification.”

A number of large telecommunications carriers have been concerned about overdependency on Huawei, which has an enormous market share in the telecom infrastructure business, Smith said.

“You’ve seen a bit of a re-balancing of that over the last couple of years,” Smith said. “We’ve benefited from some of that.”

India, Japan and Australia are international growth markets for Ciena,

“We have a very diversified global base,” he said, “but China is not one of our key markets.”

 

Jon,

Very cool article. I think I just decided to buy shares to option out, although I may see if there's a better price on a down day. Thank you.