Nettles cites `emotion' factor

Ciena chairman says more than logic is devaluing stocks

March 13, 2001|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

It was nearly the end of the meeting before the question was asked: What about the stock price?

Shares of Ciena Corp. tumbled 18 percent, or $11.81, yesterday to close at $53.31. During morning trading, the stock price hit $51.44 - a 21 percent drop from Friday's closing price.

"There are big market factors occurring," Patrick H. Nettles, Ciena's chairman and chief executive officer, said yesterday at the company's annual shareholders meeting in Linthicum. "I think we are seeing the result of investor emotions as much as investor logic."

As the technology-heavy Nasdaq composite index slid 129.40 points yesterday - dropping below 2000 for the first time in more than two years, Nettles said other companies showing signs of an economic downturn can pull the entire market down.

"Basically, everyone's grouping everything in one basket right now," said Prospero Roda, an analyst with Global Capital Securities in Baltimore.

Ciena makes equipment for fiber-optic networks. The question about the company's stock price came at the end of the 50-minute meeting. Before that, Nettles talked about how the company had raised $1.5 billion in a secondary offering and now has 44 customers.

He also talked about a shift in the industry from older, or "legacy," networks to newer, or "next generation," networks, for which Ciena makes equipment and for which the market opportunities are worth billions of dollars.

"We believe we are very well positioned to lead this shift," he said, calling the new technology the "underpinning" for intelligent optical networking.

Nettles noted the company's more than 3,000 employees and 45 offices worldwide, and boasted that Ciena has "reached a size and capability for a young, new company that is unmatched."

He also reminded investors that Ciena increased its financial forecasts during its last conference call. On Feb. 15, the company said it expected revenue for fiscal 2001 to reach between $1.67 and $1.76 billion - 95 percent to 105 percent more than its 2000 revenue.

News reports earlier yesterday suggested the company's stock price was sliding because of concerns that Ciena may have to cut profit and sales forecasts, as many of its competitors have.

"We haven't said anything about that, and we continue on the course that we set at the last conference call," Nettles said in an interview after the meeting.

In talking about Ciena's stock drop, Nettles also pointed to a Barron's article from yesterday in which an analyst argued that the telecommunications market is facing overcapacity and falling prices, and called the analyst's view of the market "naive."

Roda said that Nettles stuck to his guns on forecasts for how the company will perform and that he, Roda, believes Ciena's numbers will be OK for the quarter.

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