Ciena saw its stock jump up 9.8 percent yesterday when news broke that Credit Suisse upgraded its credit rating. Because of the credit lift--a decision Credit Suisse based on sales growth and operational leverage--Ciena's share price rose to $12.77 as of 11:43 ET yesterday morning. Prior to this jump, Ciena's stock had been in a 52-week slump of $4.98.
For Ciena, the stock price rise could also reflect Wall Street's confidence in Ciena's impending acquisition of Nortel's Metro Ethernet Networks (MEN) unit and related optical assets.
However compelling the news is, it's still hard to overlook what it will cost to integrate MEN into its fold (an estimated $180 million) and lackluster 2009 financial performance. At the same time, the upside for Ciena is that they not only gain Nortel's large customer base (Verizon) but they also expand their geographic reach.
After engaging in a bidding war with rival Nokia Siemens Networks, which made a last ditch effort early last month with an upgraded bid of $810 million, Ciena ultimately prevailed.
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