This article was amended on Feb. 6, 2004 to reflect Ciena's revenue predictions and clarify that the earnings guidance was given by analysts.

Boy, is Ciena's (NASDAQ:CIEN) face ever red.

Barely a month ago, the Maryland-based telecom equipment manufacturer was predicting up to a 10% sequential rise in revenues for its first quarter of 2004. Yesterday, however, that expectation was reversed when management instead warned of a 6% drop. What's more, it appears that the GAAP loss may come in a hair worse than the Wise men's prediction of $0.08 per share.

Ciena is blaming the mess on a single customer's tardy payment. Or, in corporatespeak, on: "formalities and processes associated with revenue recognition." That demonstrates just how precarious the state of the ballyhooed "telecom recovery" actually is.

Read between the lines of what is happening at Ciena, and you will see the true state of affairs in the industry. First, the strength does not appear to be as widespread as some analysts are predicting. In Ciena's case, all it took was a single customer's accounts payable department to turn a vendor's up quarter into a down quarter. There was a notable absence of other clients whose orders might have been fulfilled and whose payments might have been collected ahead of schedule to make up for the one slowpoke.

Second, judging by Ciena's performance, the telecom equipment makers still lack the kind of influence over their customers necessary to demand timely payment. That lack of collecting power can translate into lack of pricing power, as well, and keep margins down. And even if it does not, it almost certainly will damage the equipment makers' Foolish Flow ratios. Of course, it is also possible that Ciena's faux pas will prove to be an isolated incident, but it may be worth keeping an eye on competitors such as Cisco Systems (NASDAQ:CSCO) and Lucent (NYSE:LU) for similar signs of weakness.

Third, Ciena appears to be making the time-honored tech-company mistake of projecting revenues before they are certain to come in. Granted, it caught and corrected the mistake before it came time to release the actual quarterly earnings. But when a company starts trumpeting every single sale, or previewing good news before it is actually "news," look out, Fools.

Rich Smith owns no shares in any of the companies mentioned here. The Fool has a disclosure policy .