Tech Industry

Ciena latest telecom stock to hit the wall

Ciena shares fell $15.63, or 19 percent, to $68.38 Wednesday on concerns about potential financial problems at a large European customer and the possibility of lower sales to Sprint Corp.

While concerns about possible financial woes at European carrier Global TeleSystems Group Inc. (NYSE: GTS) are not new, a report by Bluestone Capital Group this week sparked a new bout of fears, analysts said.

Alcatel (NYSE: ALA) reiterated at an meeting with analysts on Wednesday that it had become a second source supplier to long-distance company Sprint, one of Ciena's largest customers.

Ciena (Nasdaq: CIEN) shares have been beaten down with the rest of the technology sector in recent months, falling from a 52-week high of $151 in October to below $70 Wednesday.

Investors are worried CIENA could see less business from Sprint since the carrier has two manufacturers from which to buy DWDM (dense wave division multiplexing) equipment, analysts said. DWDM equipment expands the capacity of fiber optic networks.

Last quarter, it topped analysts' estimates, earning $28.2 million, or 19 cents a share, on sales of $233.3 million.

First Call Corp. consensus expects it to pocket 13 cents a share in its fourth quarter and 64 cents a share in fiscal 2001.

Twenty of the 22 analysts following the stock maintain either a "buy" or "strong buy" recommendation.

Reuters contributed to this report.