Now THAT'S a miss. Ciena (NASDAQ:CIEN), the Maryland-based optical networking gear manufacturer, had to cut its guidance for third-quarter revenue expectations by more than 20% yesterday, causing the company's stock to tumble in heavy trading today by more than 23%. Where the company had projected that its revenues would be substantially higher than last year's $74.8 million, Ciena yesterday said that revenues would actually be flat, at about $75 million. Even gross margins had to be trimmed back from guidance at 30% to closer to 22%.

Gary Smith, Ciena's CEO, blamed "an ongoing environment of uncertainty that has led to cautious spending and deployment delays" and noted in particular that one of its core businesses, Digital Subscriber Line (DSL) equipment, had soured even more than the company had anticipated. Smith pointed to what he called a commitment by the big carriers such as Verizon (NYSE:VZ) and SBC (NYSE:SBC) to connect as many customers to high-bandwidth services "as quickly as possible" as evidence that though the quarter will be a disappointment, the market for Ciena's products is there, and the telecom companies are going to engage in additional capital spending (transcript access courtesy of CCBN).

Let's certainly hope so, but Ciena's got some digging out to do. This isn't some rounding error; this is a huge, huge miss. One analyst pointedly asked whether the board was still behind management's business strategy. The worst part of the announcement was the problems in DSL, which is a business that Ciena bought its way into by acquiring Catena. When a company that is at best on the edge of profitability in a horribly slumping industry makes acquisitions, it had best be delivering economic benefit that outweighs the cost of acquisition. The prominence of Catena in the warning suggests that though this acquisition may turn out to be beneficial, it certainly isn't yielding anything positive in the time period management and investors had hoped.

Ciena's lack of growth given its acquisitiveness will certainly pile some pressure onto Smith. This is one of a string of quarterly flubs for the company, including the quarter that ended this January in which the company blamed a revenue shortfall on a delay on a government project. Here's a thought: How about either toning down the projections or stop making them at all? All of these misses are doing nothing but shattering Ciena's credibility. The stock has now lost almost 70% of its value on the year.

Think things are getting better in telecom? Well, a quick look at Ciena's accelerating cash burn and flat revenues says that either the folks there are completely incompetent, or things are not brightening on cue for the entire industry.

Bill Mann owns none of the companies mentioned in this story.