This is a partial transcript from Your World with Neil Cavuto, August 16, 2001.

NEIL CAVUTO, HOST: Ciena — another big drag on the markets today. It plunged almost nine points, a new 52-week low. The telecom equipment maker saying the profits going forward are probably going to take a major hit as this sales slump continues.

Joining us now from Washington is the company’s CEO Gary Smith. Mr. Smith, thanks for coming.

GARY SMITH, CEO, CIENA: Good afternoon.

CAVUTO: What happened?

SMITH: Well, I don’t know what happened: We did 85 to 90 percent growth this year, which I think is an exceptional performance for any company, let alone one in telecom space...

CAVUTO: Yeah, but you know what happens there: The Street — you know, that is a great performance by the way.

SMITH: Thank you.

CAVUTO: But all of a sudden, you know, the Street was expecting — what? 95 to 105 to 110 percent growth? You didn’t deliver there, so they punish you.

SMITH: Well, I think we can only call the forecast as we see them. I still think that’s an extraordinary performance when all of our competitors are imploding around us, and we’re still giving guidance that we’re going to grow next year. So I think that’s a very robust performance and I’m certainly not apologetic for it.

CAVUTO: All right. But still, Mr. Smith, you used to outperform your colleagues in this arena, and now all of a sudden — of course, today, not surprisingly you did not — but there’s a real concern, boy, if Ciena is really coughing up blood, then there’s something bad going on here. Ciena is not giving us any clear indication as to how soon things turn around. Yeah, they talk about growth momentum, but they don’t target it, and that’s what worries the Street. Can you target something for us?

SMITH: Neil, I would not describe an 85 to 90 percent growth year around year as coughing up blood. You know, with good EPS growth, and we continue to take on new customers — six new customers this quarter alone — and many of the analysts say that we now have the No. 1 market share in this next generation space. I think we’re very, very well-placed, but we’re not completely immune from what goes on in the macroenvironment.

CAVUTO: But that macroenvironment is what worries folks and sort of tarred you and the rest of everyone. As far as the stocks are concerned, when I refer to giving up blood, that’s what I refer to. And I think that’s what worries many on the Street, that they don’t see the buy orders and the demand that they’d like to see here or abroad. They don’t see any sign that that turns around. How can you convince them that they are wrong?

SMITH: You know, our view has been most consistent, you know, over the last two years. There’s a fundamental shift going on in the telecom space between, you know, the old legacy vendors, the old voice-architected networks and the new-generation data-centric network providers like Ciena. I think there’s a fundamental changing of the guard. I think all the evidence is there to support that. The fact that Ciena can still boast very robust financial performance, and its legacy, larger voice competitors are not. And I think if you talk to the carriers, we are gaining momentum and market share for one very good reason: We’re providing products that reduce their costs and increase their intelligence on the network to go create services that people will pay for.

CAVUTO: All right.

SMITH: So I think, you know, as an investor, you’ve got to look at what’s going to happen when this turmoil finishes. Who’s going to come out as a winner? And we think it’s Ciena.

CAVUTO: All right, we shall see. Gary Smith, thank you very much, the CEO of Ciena.

SMITH: Thank you, Neil.

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