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Stocks For Mom
by TMF Hoyden

CIENA Corporation
(Nasdaq: CIEN)
8530 Corridor Rd.
Savage, MD 20763
(301) 317-5800
http://www.ciena.com

Hi Mom!

Remember when you tried to bribe me to go to college close to home so your phone bills wouldn't be too high? Well, we all know that that plot didn't work, but thinking back on your scheme gave me an idea for your Mother's Day present.

One of the hottest IPO's this year was from a company that sprang up almost over night right down the road from where I did finally go to college (hey, at least I went). It's called CIENA Corp. (headquartered in the great metropolis of Linthicum, Maryland) and they make this cool little thing that has the telecommunications world abuzz. The technology that they have created has allowed big companies like Sprint and WorldCom to increase the amount of traffic that they can handle over their existing fiberoptic routes by as much as 16 times what they normally could handle.

Why, you ask, is this important?

Because it means that ultimately my long distance phone calls to you are going to be getting a lot cheaper. Who knows.. maybe I'll even call more often!

Is this a great Mother's Day present or what?

HERE'S WHAT WE'RE HOPING FOR: The stock has been one of the techie superstars this year. It got as high as $44 on Feb. 26 after going public at $23 just a few weeks earlier. It's done the roller coaster thing since then and closed at $33 yesterday after a glowing report from Lehman Bros. and a buy recommendation from Soundview Financial.

Analysts are looking for $0.64 EPS for the year ending in October and $0.82 in 1998... a 28% increase in earnings. The street is also expecting a significant ramp-up in capital spending from the phone companies in the next year which will mean more revenues for telecom equipment providers like Ciena.

HERE'S WHAT TO LOOK OUT FOR: So what's the downside? Well, their biggest competitor is Lucent Technologies (you know... the Bell Lab geeks). While Ciena is usually pretty smart so far they haven't been able to translate their technology into actual customers and revenues. It's definitely a David and Goliath story. I'm for betting on David on this one. Also, we all know how volatile the tech stocks can be. Remember, this isn't one of Dad's utilities.

Hey! Tell Mrs. Jones that I said "hi" and that her son's long distance bills have gone way down too ever since we... never mind. I'll save that for another letter. Happy Mother's Day. :-)

Love,

Trudy

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