December 9, 2010
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of communications equipment specialist Ciena (Nasdaq: CIEN ) jumped as high as 13% in intraday trading Thursday despite posting a wider-than-expected quarterly loss, as its outlook for next quarter easily topped expectations.
So what: The latest results mark the ninth-straight quarterly loss for Ciena, but thanks in large part to the purchase of optical networking and Ethernet assets from Nortel, its sales have spiked recently. For the first quarter, Ciena expects revenue of $410 million to $430 million, versus the average analyst estimate of $414 million.
Now what: Fools might do better to look elsewhere in the space. While Ciena's big gamble on Nortel's assets seems to be paying off at the moment, I'd go with either the more specialized Infinera (Nasdaq: INFN ) or the more powerful Cisco (Nasdaq: CSCO ) as better long-term bets in the sector. Ciena is now up 25% over the past month alone, so if you must have it, at least wait on a pullback before jumping in.
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