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NOTE TO EDITORS: The Following Is an Investment Opinion Being Issued by Ridgewater Equity (RWE).

NOTE TO EDITORS: The Following Is an Investment Opinion Being Issued by Benchmark Journal.

Courses completely independent of specific vendors or products and focus on the protocols and technologies to design, build, operate and manage large-scale Carrier Ethernet networks

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...

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WASHINGTON (MarketWatch) - Shares of Sprint Nextel Corp. and Ciena Corp., the leading gainers in the telecommunications sector the past two days, were the top decliners in Wednesday trades.

Sprint Nextel Corp. and Ciena Corp. are the top performers in the telecommunications sector for a second day.

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

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

( click to enlarge ) I wrote a post last week, that there might be a buying opportunity present in Rambus (RMBS), as it bounced from its 15.70 horizontal support again. Notice how the stock has been trading in clear horizontal channel over the past weeks. It looks like the recent consolidation is ...

The telecommunication and network specialist, Ciena Corporation (CIEN) announced that it has received regulatory approval for the proposed acquisition of substantially all of Nortel Network Corp.’s (NT) optical and Ethernet division. The company has been granted termination of the waiting period under the Hart-Scott Rodino Act in the United States. The Canadian Competition Bureau has also [...]

(CIEN) Ciena Corporation Purchases NT’s Ethernet Business

The telecommunication and network specialist, Ciena Corporation (CIEN) announced that it has received regulatory approval for the proposed acquisition of substantially all of Nortel Network Corp.'s (NT) optical and Ethernet division.
 
The company has been granted termination of the waiting period under the Hart-Scott Rodino Act in the United States. The Canadian Competition Bureau has also approved the takeover. 

Ciena plans to acquire substantially all of the optical networking and carrier Ethernet assets of its rival Nortel Networks’ Metro Ethernet Networks (MEN) division, for a total of $521 million ($390 million in cash and 10 million in shares worth $142 million based on the Oct. 15 market price). 

However, the deal also requires the approval of the United States Bankruptcy Court for the District of Delaware and the Ontario Superior Court of Justice. Nortel had filed for bankruptcy in January. 

The deal is still subject to a competitive bidding process scheduled for Nov. 13. Recently, according to a Bloomberg report, it appears that Nokia Siemens Networks, a joint venture between Nokia (NOK) and Siemens AG (SI) may bid for Nortel’s Ethernet business, which could enable it to expand its own Ethernet business in North America. 

With a market capitalization of $1.12 billion, we expect Ciena to clinch the deal, which would help the company’s Carrier Ethernet platform differentiate and provide a competitive advantage against larger players such as Alcatel-Lucent (ALU), Cisco Systems (CSCO) and Tellabs (TLAB). 

We believe that the deal will provide strong growth potential to 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 boost revenue grow, integration risk will be something to consider. We have a Neutral rating on the stock.
Read the full analyst report on "CIEN"
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 "ALU"
Read the full analyst report on "CSCO"
Read the full analyst report on "TLAB"
Zacks Investment Research

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