Longhaul ramping, CIEN, JDSU & AVNX set to benefit from VZ/China deal.

The trend for further increases in long-haul spending appears intact. This deal follows similar data points from ALU & AVNX.

http://biz.yahoo.com/ap/061218/verizon_china.html?.v=2

Long CIEN JDSU AVNX

Potential catalyst for the Fiber Optic co's this week.

IPTV deployments may get a gentle shove from the FCC. TLAB, ALA, CIEN & JDSU could benefit from positive vote.

http://biz.yahoo.com/rb/061217/fcc.html?.v=1

Long TLAB, CIEN & JDSU

JDSU -- I like the current setup.

For a current investment in JDSU (short-intermediate term) -- here are some key
points that stand out currently.

1. Stock removed from Q's resulting in large volume day on Friday.
Stock traded almost 4 times normal volume and obviously most of the
volume was driven by sellers readjusting the Q's. Even with that, the
stock held up fairly well closing down only about 40 cents. That says
to me that there were plenty of folks willing to soak up all that
selling -- this is not retail folks buying. I thought JDSU could fall
by as much as a buck on the Naz rebalance. Now that JDSU is out of Q's
that has other implications that I'll address in a bit.

2. Even with recent pressure after EPS spike the stock held the 50 day
MA. MACD stayed on slightly bullish territory and RSI is neutral, but
any improvement will put in solidly bullish territory. Again, all good
signs -- esp. considering that JDSU is still barely above $2 on a
pre-split level and I imagine some tax loss selling has been occurring
in the name.

3. Recent action in OPTM & CIEN should bode well for JDSU. CIEN &
JDSU have been sister co's for quite some time and it's fairly unusual
for one to really do well without the other participating.

4. While I don't think we will have a huge Classic Jan. effect this
year, that doesn't mean some co's will not act exhibit a good Jan
effect bounce. JDSU is one of those names.

5. Negativity still very high even while stock is Technically good at
a minimum. That is a classic divergence pattern I look for.

6. Fundies are improving but maybe more slowly than names like CIEN.
I still think the T&M business will continue to show solid progress
with the continued global build out. And that part of the business is
probably very undervalued within the stock -- in a very similar manner
that I think the networking biz within MRVC is undervalued.

7. Back to being out of the Q's. While some may think of this as a
negative, I think it could help much more than hurt in the future.
JDSU has been a name long loved by the shorts to hit hard on any big
day's of NAZ weakness. Yet on big up days, few folks target JDSU for
trading for upside moves. Names like GOOG AAPL QCOM BRCM etc... tend
to get the nod for that type of action. Now that they are out of the
Q's we could dramatically less short sided targeting manipulation.
That could serve to strengthen the longer term TA picture as the stock
could exhibit a more stable trading pattern which many institutions
like to see.

Sometimes trading dynamics like this are way more important to stock
performance than many other factors.

8. Another note of Q's. Many times stocks removed from the Q's end up
doing very well just due to sector and valuation dynamics. In other
words, Index rebalancing is all about putting in new names based on
increased market cap & visa versa. I.E., the index is basically buying
the high & selling low. The Q's don't have a lot of changes every year
but the Russell and S&P have many more names and there are trading
systems based on buying the rejects of those indices and results are
quite good.

9. Short interest. While not super high it's still plenty high with
11mm out of 200+mm shares outstanding or 5.6% of float at last report.
Not sure this helps much this month, as the shorts will figure to ride
it through tax loss selling. But late this month and into next year I
expect to see more short covering. Moreover, a good EPS report next
qtr. could nearly put the nail in the shorts coffin.

10. With T/BLS issue I am not confident of big beats out of JDSU for
the next 1-2 qtr's but I still think they will be solid vs. the co's
conservative guidance. Once T/BLS issues are resolved I would expect a
return to some qtr's of strong results and guidance.

11. Lastly, any little bit of positive EPS & cash flow in the next
couple qtr's could send the shares higher.

Bottom line. I continue to like the setup.

Long JDSU

CIEN crushes the qtr!!

CIEN call is so solid. There is no way I'm selling CIEN shares
until the stock is at least 10-15 points higher. Stock still well off
year highs, with much of damage still being felt from the post R/S (reverse split)
sell-off. Stock was selling between $27-31 ahead of last qtr's call
and before R/S announcement. The R/S muted how strong last qtr's
result and call actually were.

They beat and guided higher but the R/S stole all that thunder -- baring the R/S the stock probably would have traded 5-10% higher on last qtr's strength to the $32-35 range assuming post split pricing. This also assumes zero lift from the strong general market. CIEN has produced results in line with other top tech performers like AAPL, yet their stock has fallen huge since R/S. Now profitability is solid and while each qtr. could still be lumpy I
would look for CIEN to post stunning YOY EPS growth for at least 2 years.

If I was NT CSCO TLAB or ALA there is no way I would let CIEN remain
independent. If I was a short, there is no way I would stay short this name.

I added shares ahead of the call and during the call -- moreover, CIEN was
already a substantial core holding. The 200 day MA is at $28.36 and if
CIEN breaks that level, I may add trading shares in and around that level.

Technically, the stock is passing through the 90 day MA currently and
historically that has had a very high correlation with continuing performance for CIEN.

Lastly, analyst cov. is still hugely negative with 19 of the 24
analysts rating the shares a hold or lower. Only 1 strong buy on CIEN
currently, which is simply amazing after 4-5 qtr's in a row showing improvement. At this point, that analyst negativity should change for the positive in the coming weeks. IMO, CIEN should trade substantially higher during 2007.

Long CIEN

CIEN call is so solid. There is no way I'm selling CIEN shares
until the stock is at least 10-15 points higher. Stock still well off
year highs, with much of damage still being felt from the post R/S (reverse split)
sell-off. Stock was selling between $27-31 ahead of last qtr's call
and before R/S announcement. The R/S muted how strong last qtr's
result and call actually were.

They beat and guided higher but the R/S stole all that thunder -- baring the R/S the stock probably would have traded 5-10% higher on last qtr's strength to the $32-35 range assuming post split pricing. This also assumes zero lift from the strong general market. CIEN has produced results in line with other top tech performers like AAPL, yet their stock has fallen huge since R/S. Now profitability is solid and while each qtr. could still be lumpy I
would look for CIEN to post stunning YOY EPS growth for at least 2 years.

If I was NT CSCO TLAB or ALA there is no way I would let CIEN remain
independent. If I was a short, there is no way I would stay short this name.

I added shares ahead of the call and during the call -- moreover, CIEN was
already a substantial core holding. The 200 day MA is at $28.36 and if
CIEN breaks that level, I may add trading shares in and around that level.

Technically, the stock is passing through the 90 day MA currently and
historically that has had a very high correlation with continuing performance for CIEN.

Lastly, analyst cov. is still hugely negative with 19 of the 24
analysts rating the shares a hold or lower. Only 1 strong buy on CIEN
currently, which is simply amazing after 4-5 qtr's in a row showing improvement. At this point, that analyst negativity should change for the positive in the coming weeks.

IMO, CIEN should trade substantially higher during 2007.

Long CIEN

To listen to conf. call see link:

http://biz.yahoo.com/cc/1/75611.html

RBAK -- serving up a short fry!

Stock serving up a major short fry today on announcement of significant Chinese Broadband contract. Not sure I would chase RBAK today but I do think the stock will trade into the $20's over the next couple qtr's.

One by one, stocks in this group are getting walked up and all the while T/BLS merger is still on hold and thus large spending being held back -- also contributing to overly negative analyst sentiment.

I see the finalization of T/BLS as a potentially major positive catalyst for stocks in this group. RBAK included.

Long RBAK -- though I did trim some today. Will buy the shares back on a 5-10% pullback from sale price in the $17.40's.

SEAC -- Another good qtr. telco/cable infrastructure.

SEAC -- nice qtr., very strong growth. VOD(video on deamand) is in a stunning growth phase currently. Like OPTM, SEAC is another unique player that sells into both the Telco & Cable equipment space.

While SEAC doesn't have the most peerless balance sheet in the space, it's still pretty darn good. I would encourage a good view of the actual balance sheet as SEAC has solid cash, short term investments as well as long term investments -- with no debt. At less than 2 times both P/B and PSR the stock is still quite cheap as long as growth continues -- as mgmt has indicated on the conf. call. Plus there is just enough of the shares currently short to make future price action interesting.

http://finance.yahoo.com/q/ks?s=SEAC

I think SEAC is poised to benefit from still emerging growth of VOD programming, new revenue streams and a softening of overly negative sentiment in their industry group.

Long SEAC

Optium's (OPTM) first qtr... So far so good.

Great rev. numbers from OPTM (114% growth YOY), solid profits and guidance as well. Going to listen to call. This could be an exciting stock over the next few weeks/months.

OPTM has recently IPO'd and competes in the JDSU/CIEN fiber optics group. While looking expensive currently at around 7 times sales, on a run rate basis off of next couple qtr's the stock is selling at approx. 4 times sales which is fairly closely aligned with other comp's in group.

Great group dynamics currently. This is one of my favorites sectors currently.

Stock spiking nicely AH's.

Long OPTM

Internet Video ramp accelerates...

Video over internet is on the rise everywhere and the Goog/YouTube combo will be one of the big 3 for internet distribution. Hard to say if they'll be numero uno, but they have a chance. Just guessing that they will be number 1 in turning their content into real Rev's for themselves and distribution partners. YHOO is in this game pretty well(good position in news feeds). AAPL in the game as well. If we can get some kind of AAPL/GOOG deal down the road then GOOG and their distr. partners should get a firm number 1 position. This would be in the form of a tie-in to podcasting from GOOG properties and a direct feed from a GOOG search to Ipod/Itunes linkup. The new ITV product could be a huge for this as well and allow GOOG/YouTube video search feeds to be readily streamed or moved for viewing on TV's. I would be surprised if something like this isn't in the works already.

Long GOOG YHOO and wanting some kind of 10%+ pullback to put reload some AAPL again.