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Ciena gains on AT&T deal

The networking company gains on word that AT&T is using its optical transport system, the latest in a recent string of good news for Ciena.

Ciena shares rose Tuesday on news that AT&T is using its optical transport system.

The announcement is the latest in a string of good news for the company, which topped estimates in its second quarter and said it could continue to meet its financial forecasts despite the tough environment.

Shares in the provider of optical networking systems and software were up $3.51, or more than 3 percent, to $64.30--still off their 52-week high of $151. Earlier in the day, shares touched $66.73. AT&T's shares fell 67 cents to $21.15.

Ciena said that AT&T has successfully tested and begun deployment of its MultiWave Metro intelligent optical-transport system. Financial terms of the deal were not disclosed.

AT&T said it will use Ciena's MultiWave Metro platform in a number of its local services to business customers in 71 markets across the United States. Ciena's MultiWave Metro is an optical transmission and switching system that allows telephone service carriers to increase the capacity of their networks by transmitting multiple signals simultaneously over the same circuit.

AT&T already is carrying customer traffic using Ciena's product in its Los Angeles metro network.

In another positive return for the Linthicum, Md.-based company, Morgan Stanley analyst David Jackson said in a research note Tuesday that industry researcher Dell'Oro has confirmed his best hopes for the company's business.

"Dell'Oro's data implies that Ciena's long-haul business grew 22 percent sequentially," Jackson wrote. "We view Dell'Oro's data as confirmation of Ciena's announced results."

In the company's second quarter, it announced that revenue had increased 21 percent sequentially overall. Jackson maintained his "outperform" rating on the stock.

Other analysts also have bullish ratings on the company. SG Cowen analyst John Butler reiterated his "strong buy" rating on the news Tuesday. Nine out of 27 analysts covering the company rate it a "strong buy," according to Zack's Investment Research.

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