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UBS Financial Downgrades Ciena to 'Reduce'


UBS Financial downgraded Ciena (CIEN) to reduce from neutral.

On Thursday the company posted a 24 cents fourth-quarter loss, vs. a $1.75 loss (GAAP) on a 14% revenue rise. Analyst Nikos Theodosopoulos says the delay in revenue ramp-up relative to his prior expectations caused him to reduce his fiscal 2004 (Oct) outlook. He doesn't expect the company to break even through at least fiscal 2006.

Theodosopoulos says to generate earnings power that's consistent with Ciena's current valuation, the fiber-optic equipment maker needs $200 million in quarterly sales in fiscal 2005, vs. the current run-rate of $70 million. He widened his 16 cents fiscal 2004 loss estimate to a 22 cents loss, and sees a 9 cents fiscal 2005 loss. Theodosopoulos also cut the $6.40 target to $5.50.


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