Mea culpa, Fools. Network infrastructure specialist Ciena (NASDAQ:CIEN) reported its fiscal Q4 and full-year 2008 earnings yesterday, and the news was worse than I had feared -- and much worse than Wall Street was expecting. Suffice it to say that the stock is down about 20% from Earnings Eve -- that should tell you how bad the numbers were.

Although it may seem brutal, yesterday's news also wrapped up Ciena's fiscal year. So let's take a look at the year that was:

  • Q4 may have been a bummer, but overall, fiscal 2008 did fine by Ciena. Sales grew 16% to $902.4 million, although that still lagged analyst estimates.
  • Gross margins came to a healthy 50%, lagging Cisco (NASDAQ:CSCO) and Juniper Networks (NASDAQ:JNPR) by a fair sight, but beating Nortel (NYSE:NT) and Alcatel-Lucent (NYSE:ALU) handily.
  • Yet Ciena's net profit got cut in half, down to $0.42 per share.

Danger! Horror! Get Out!
Not so fast. First, Fool, you must chill. Sure, the GAAP picture doesn't look pretty, but I'm still bullish on Ciena, and here's why:

First, keep in mind that Ciena has ample resources to ride out this recession. The company's got about $917 million in "cash, cash equivalents and short-term investments," versus about $800 million in convertible debt. That's $117 million net cash, folks.

Second, this crisis in telecom capital expenditure spending may not last as long as we think -- and the future looks bright on the other side of it. Says CEO Gary Smith: "By our analysis, [the telecom industry is] roughly $8 to $12 billion into what is forecast to be a $70 to $90 billion infrastructure spend ... That is expected to last for the next decade at least." Right now, Ciena is seeing some "push outs and project delays [but] not cancellations,” most likely from customers like Verizon (NYSE:VZ), AT&T (NYSE:T), and BT. All of which leads management to predict "that this will not be a multi year downturn."

Meanwhile, a tough year still left Ciena generating $87.6 million in free cash flow. Weighed against the firm's $550 million market cap, that leaves Ciena trading for a price-to-free cash flow ratio of just 6.3. Subtract out the firm's net cash position, and it looks cheaper still.

Foolish takeaway
The next quarter or three could be rough for Ciena, no doubt. But the valuation looks compelling. If Ciena does what analysts expect, and emerges from this crisis to a future of 14% long-term earnings growth, the stock looks downright dirt cheap at today's prices.

What did we expect out of Ciena last quarter, and what did we get? Find out in:

Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.