Shares in Ciena Corp. skidded $20.8125, or 15.2 percent, to $116.50 yesterday, a day after the company reported strong earnings for its second quarter.
Analysts remained bullish on the company, however, and said Ciena shares were caught in yesterday's slide in technology stocks as investors took profits on inflation and other fears.
The Nasdaq composite index fell 148.31 points, or 4.19 percent, to 3,390.40.
Also, weakness in the telecommunications sector was fueled by reports that government regulators were opposed to the proposed WorldCom Inc.-Sprint Corp. merger."This is nothing more than part of the downdraft in technology stocks," said telecommunications analyst David Toung of Argus Research in New York. "The fundamentals for this company still look quite strong."
Christopher J. Crespi, telecommunications analyst with Banc of America Securities, reiterated his "buy" recommendation on Ciena yesterday, citing strong growth prospects. On Thursday, the Linthicum-based maker of optical networking equipment reported earnings of $18.4 million, or 12 cents a share, beating Wall Street estimates by 2 cents.
Company President Patrick Nettles said in a conference call with analysts after the market closed Thursday that Ciena expected the next two quarters to show strong growth as well.
But he also cautioned that two new switching-equipment products might not see combined sales of up to $100 million this year as projected earlier. Nettles said it was more likely that the products would see sales closer to $50 million. One product is being re-engineered to customer specifications and the other's sales could be crimped by longer than expected testing by potential buyers, Nettles said.
Toung, of Argus Research, said he did not think that Nettles' comments had much to do with yesterday's tumble in Ciena's shares.
Ciena competitor Sycamore Networks Inc. of Massachusetts also saw its shares drop yesterday despite exceeding analysts' earnings estimates by a penny Thursday.