Business

NEW YORK (Reuters) - The auction for Nortel Network's optical networking and carrier ethernet business went into a second day on Saturday, after Ciena CIEN called for a break in the auction late on Friday, two sources said.Last month Nortel Networks Corp, the bankrupt Canadian telecommunications equipment maker, said that...

Here's what other investors are going to do ...

Most U.S. stocks ended the week with losses, but the Dow Jones Industrial Average notched a small rise for the period thanks to gains on Friday in health care stocks and consumer-related shares. Tech shares were the biggest losers on the week.

MarketWatch's Top Stories Of The Week, Nov. 16-20

Budget air carriers have been snatching up travelers and market share from troubled legacy carriers for the better part of two decades, and now they're whipping them on the Internet, too.

Nortel Network Corp.’s (NT) said that the final auction for acquiring all of its Metro optical and Ethernet Networks division is on Nov 20, 2009. The deal is subject to a competitive bidding process. Nokia Siemens Networks, a joint venture between Nokia (NOK) and Siemens AG (SI) and a private equity firm One Equity Partners have jointly [...]

(NOK) Final Deadline for Nortel Bid

With a possible buyout of General Electric Co.’s (NYSE: GE) NBC Universal Inc. in the works, Comcast Corp. (Nasdaq: CMCSA) is adapting to a changing technological landscape.[More...]

The New York City Council is voting on a resolution this morning supporting the idea that Internet service providers cannot discriminate against web traffic on their networks. As gestures go, this resolution supporting net neutrality is more symbolic than it is useful, and to that end has already yielded a couple of photos of FCC [...]

Nortel Network Corp.'s (NT) said that the final auction for acquiring all of its Metro optical and Ethernet Networks (MEN) division is on Nov 20, 2009. 

The deal is subject to a competitive bidding process. Nokia Siemens Networks, a joint venture between Nokia (NOK) and Siemens AG (SI) and a private equity firm One Equity Partners have jointly bid for Nortel’s optical networking and carrier Ethernet business challenging Ciena Corporation’s (CIEN) bid for the assets.
 
The telecommunication and network specialist Ciena offered a total of $521 million ($390 million in cash and 10 million in shares) to Nortel for acquiring substantially all of its MEN division.
 
We believe that the deal has strong growth potential for Ciena’s rapidly expanding metro Ethernet business and optical networking products. The Nortel deal would be the largest ever for Ciena and would also help it expand geographically.
 
While the Nortel acquisition will enable revenue growth, integration risk will be an issue. Moreover, the deal could pull Ciena into a net debt (debt exceeding cash) position. Other potential bidders include Ericsson (ERIC) and Infinera (INFN), who could take the deal away from Ciena.
 
Ciena reported better-than-expected results for the third quarter amid cautious consumer spending and weak demand. However, the more stable macroeconomic environment helped it deliver sequential growth, although year-over-year comparisons have been weak. 

Ciena is set to announce its fourth quarter results on Dec 10, 2009. Though market conditions have improved Ciena expects results to be lumpy as customers are still spending cautiously. As a result, the company guided revenue in the fourth quarter to be flat sequentially.
 
Non-GAAP operating expenses for the fourth quarter are expected to be in the low to mid $80.0 million range. The company expects higher prototype costs in the upcoming quarter. 

While pricing remains competitive, the company expects to sustain gross margins in the mid to high 40% range in the near term. Ciena’s restructuring initiatives to trim operating expenses appear positive for the company.
 
Although we do not expect Ciena to become profitable in the next two quarters, we do expect a recovery in 2010 due to favorable operational execution and growth in data traffic. However, uncertainty regarding the closure of the acquisition of Nortel’s assets further adds to the risk.
 
We therefore maintain our neutral rating on the stock.
Read the full analyst report on "NT"
Read the full analyst report on "NOK"
Read the full analyst report on "SI"
Read the full analyst report on "CIEN"
Read the full analyst report on "ERIC"
Read the full analyst report on "INFN"
Zacks Investment Research

With a possible buyout of General Electric Co.’s (GE) NBC Universal Inc. in the works, Comcast Corp. (CMCSA) is adapting to a changing technological landscape. Comcast, the United States’ largest cable television provider, is hoping to avoid becoming the next newspaper or record company by expanding its role from an entertainment medium ...