Nortel Networks' disappointing third-quarter sales had a cooling effect on fiber-optic equipment stocks Wednesday as leaders such as Ciena, JDS Uniphase and SDL all absorbed huge losses.
Nortel (NYSE: NT) shares fell $16.69, or 26 percent, to $46.63 after posting a profit of $574 million, or 18 cents a share, on sales of $7.31 billion.
Several analysts downgraded the stock Wednesday, mainly because the $7.31 billion in sales was more than $200 million below the average estimate for the quarter.
Nortel's woes carried over to other fiber-optic and chip stocks.
Applied Micro Circuits (Nasdaq: AMCC) shares shed $46, or 23 percent, to $152.31 after SG Cowen cut the stock to a "buy" from a "strong buy," partly because Nortel is one of the chipmaker's largest customers.
Ciena (Nasdaq: CIEN) shares tumbled $25.13, or 19 percent, to $110.25 while SDL (Nasdaq: SDL) and JDS Uniphase (Nasdaq: JDSU) plunged $67.50 and $19 a share, respectively.
Lehman Brothers also cut JDS Uniphase from a "buy" rating to "outperform" Wednesday.