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Undersea-network deal buoys Ciena

Shares of the fiber-optic company surge after TyCom announces it will use Ciena's products in a new undersea optical network.

Shares of Ciena surged Tuesday after TyCom announced it would use the fiber-optic company's products in a new undersea optical network.

TyCom is building a high-speed broadband network that will link six continents, and is selling broadband capacity on the network to international telecommunications carriers. The company said that initial orders for Ciena products will be for more than $150 million, as part of a two-year deal. TyCom is the world's largest supplier of undersea fiber-optic cable networks.

Ciena was up $6.32, or about 12 percent, to $61.60 by market close. TyCom, though it reached a high of $16.95 earlier Tuesday, fell to $16.15, down 11 cents, by market close.

Linthicum, Md.-based Ciena makes products that increase the capacity of long-distance fiber-optic telecommunications networks by transmitting multiple signals simultaneously over the same circuit. TyCom will use Ciena's MultiWave CoreDirector and MultiWave CoreStream systems in its network.

The news comes amid concerns about a slowdown in telecom spending that is expected to ding suppliers, including Ciena. Some analysts have predicted that carriers will cut spending on telecom equipment by as much as 20 percent from 2000.

UBS Warburg analyst Nikos Theodosopoulos recently downgraded several networking-equipment stocks, including Ciena, saying U.S. telecom companies would continue to cut back on spending in 2001.

But Ciena has remained relatively upbeat; the company recently saw its stock tick upward when it didn't report any bad news at an investment conference.

In February, Ciena topped estimates with first-quarter earnings of 18 cents a share on revenue of $352 million. The company also upped its outlook for future quarters.