Ciena (CIEN) swings from +5% permarket to -6% open

I'm a buyer in scale of Ciena (CIEN) here on this drop to the 50 day moving average. A gift.

Why?
Per Reuters: "Ciena said it expects its adjusted fourth quarter profit per share to be "roughly flat" compared with its third quarter level."

Now this will disappoint the sequential growth crowd (of which I generally am a founding member), but the jump between this quarters expectations and reality was so high $0.41 vs $0.31 (32% beat) you cannot expect yet another huge jump next quarter. What is important is the trend.

So what does that really mean? That means they think they can make approximately $0.41 EPS next quarter. Companies generally are conservative so we are probably looking at a $0.43-$0.45 quarter.

As of 24 hours ago, what did analysts expect for the next quarter? $0.32

So that's a beat by about $0.09 - $0.13 next quarter... vs analysts expectations 24 hours ago.

Full year estimates for CIEN as of last night? $1.11 for 2007.

They just beat this quarter by a dime, and are now projecting next quarter to be off at minimum by 9 cents, so let's tack on another $0.19 to 2007 EPS. That takes us to $1.30 EPS for 2007 vs analysts expectation (24 hours ago) of $1.11.

That's a 17% increase folks. And at $36 this gives CIEN a forward PE of 27.7 for a company now growing at a 35-40% pace with margins expanding in a market Cisco (CSCO) CEO called the best he has ever seen.

I just added a big swig in my personal account as well; with the move down to the 50 day moving average ($36.20) this is a very nice opportunity.

Ciena is now the fund's number one position on this weakness, with a nearly 5% stake (up from below 2% last night). Pending a listen to the conference call tonight to make sure there are no cockroaches, I could be adding more tomorrow.

Networkers. Got some?

Long CIEN in fund, and personal account