JP Morgan downgraded Ciena (CIEN

) to underweight from neutral.

Analyst Ehud Gelblum says the negative preannouncement is Ciena's second in the last three quarters. He notes the $75 million in revenue is 22% below his $95.8 million estimate, well below the implied guidance of "up to 30%." He says the 7-cent to 8-cent third-quarter loss is in line with guidance.

Gelblum says Ciena's core business -- optical-networking manufacturing -- has apparently fallen off considerably. He widened the 29-cent fiscal 2004 (Oct) loss estimate to a 31-cent loss. While he believes a move away from the core optical business is strategically correct, he doesn't think current a revenue opportunity is diverse enough to support the operating model with a quarterly revenue breakeven level of about $185 million.