) to hold from add.
Analyst Kenneth Leon says the company's larger competitors in optical systems have issued weaker results and a weaker outlook for the next quarter. He says absent any profitablility in fiscal 2002 (Oct.), he believes management will have to capitulate, and take the necessary cost cutting moves to achieve breakeven. Leon notes low capital expenditures from incumbent service providers has hurt Ciena's prospects of getting early wins from regional bell operating companies in the U.S. and postal, telegraph and telephone companies in Europe for fiscal 2002.
Leon thinks the sales cycles is longer than next-generation backbone carriers like Qwest, Williams or others that were at the heart of the company's revenue base before. He widened his $0.13 fiscal 2002 loss estimate to a $0.26 loss, and cut the $0.13 fiscal 2003 EPS to $0.07 EPS.