Ciena shares fall after SEC filings

Analysts call 11% dip to $18 an overreaction by skittish investors

April 07, 1999|By Mark Ribbing | Mark Ribbing,SUN STAFF

Ciena Corp. shares fell $2.375 yesterday to close at $18.9375, an 11.14 percent decline, as investors reacted to a series of recent company filings with the Securities and Exchange Commission.

The Linthicum telecommunications equipment maker said one of those filings, delivered Monday, resulted from discussions between the company and the SEC over what details Ciena should reveal about a sales agreement with its largest customer, Sprint Corp.

G. Eric Georgatos, Ciena's general counsel, said the SEC had contacted Ciena after the company filed its annual report in December. The filing included information about its contract with Sprint.

Ciena had treated certain details, such as the contract's delivery schedule, as confidential. At the direction of the SEC, Ciena disclosed some of those details in Monday's filing.

Georgatos said the situation was "not a big deal in any way, shape or form."

SEC spokesman John Heine said the commission would not discuss the filings of specific companies.

The SEC's contact with Ciena may have unsettled some investors. "People saw that and said, `Whoa, that doesn't sound good. We don't know what it means, but it doesn't sound good,' " said analyst

James C. Kedersha of SG Cowen & Co. in Boston. "It looks like what happened is a lot of nothing, really."

In another filing Monday that set some investors on edge, Ciena released an updated report on the risk factors facing the company. The update was intended to reflect the company's changed circumstances since it acquired start-ups Lightera Networks Inc. and Omnia Communications Inc. last month.

Such reports are a routine part of stock filings, but this risk report may have had more punch than in the past because of the SEC's new "plain English" rules requiring companies to simplify the language of their stock filings.

Kevin C. Slocum of Soundview Technology Group in Stamford, Conn., said Ciena's blunt projections of weak sales to two of its biggest customers, Sprint and MCI WorldCom Inc., gave investors good reason to get skittish.

"Within the context of that [language] change, people are interpreting the risk profile of Ciena somewhat differently than they did before," Slocum said.

However, other analysts said Ciena's risks had been known for some time and that the market might have overreacted to the company's new SEC documents.

"There is nothing new in the SEC filings," observed Raj Srikanth of First Albany Corp. in New York.

Pub Date: 4/07/99

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