Ciena Dips in Q1

LINTHICUM, Md. -- Ciena® Corporation (NASDAQ:CIEN - News), the network specialist, today announced unaudited results for its fiscal first quarter ended January 31, 2009. The Company also detailed savings it expects from cost-reduction actions that have been and will be implemented.

Revenue for the fiscal first quarter 2009 totaled $167.4 million, representing a 7% sequential decrease from fiscal fourth quarter 2008 revenue of $179.7 million, and a decrease of 26% over the same period a year ago, when Ciena reported revenue of $227.4 million.

On the basis of generally accepted accounting principles (GAAP), Ciena’s net loss for the fiscal first quarter 2009 was $(24.8) million, or $(0.27) per common share. This compares to fiscal fourth quarter 2008 GAAP net loss of $(25.4) million, or $(0.28) per common share, and a reported GAAP net income of $28.8 million, or $0.28 per diluted common share, for the same period a year ago.

Ciena’s adjusted (non-GAAP) net loss for the fiscal first quarter 2009 was $(8.3) million, or $(0.09) per common share. This compares to fiscal fourth quarter 2008 adjusted (non-GAAP) net loss of $(9.2) million, or $(0.10) per common share, and adjusted (non-GAAP) net income of $49.6 million, or $0.47 per diluted common share for the fiscal first quarter 2008. A reconciliation between the GAAP and adjusted (non-GAAP) measures contained in this release is provided in the table in Appendix A.

“We are managing our business with the expectation that current macroeconomic realities will continue to pressure our customers’ spending levels,” said Gary Smith, Ciena’s CEO and president. “With operating expenses down sequentially 12% from our fiscal fourth quarter, this quarter’s results reflect the benefit of company-wide cost-control initiatives, and we continue to take steps to drive efficiencies and more tightly align our resources with market opportunities. At the same time, we are preserving our strategic capabilities and competitive advantage by prioritizing key product, technology and market initiatives.”

Headcount Reductions and Facility Closure

On Wednesday, March 4, Ciena took action to effect a headcount reduction of 200 employees, or 9% of its global workforce, with reductions occurring across every organization and geography. As part of this action, the Company will close its Acton, Massachusetts, research and development facility during the course of the next four months. Ongoing development work previously conducted at the Acton facility will be consolidated on a functional basis with related efforts already in progress at other Ciena locations.

“We expect that, over the next few quarters, the combination of the cost-reduction initiatives we implemented during our fiscal first quarter and the headcount- and facilities-related cost reductions we’ve announced today will reduce our adjusted (non-GAAP) quarterly operating expenses to approximately $80 million,” said Smith.

In addition to development activities in Acton and at its headquarters in Linthicum, Maryland, Ciena has development facilities in Alpharetta, Georgia; Kanata, Ontario; San Jose, California; Spokane, Washington; and Gurgaon, India. At the end of its fiscal first quarter, Ciena employed 2,238 people worldwide.

First Quarter 2009 Performance Summary

• Achieved $167.4 million in revenue.

• Continued to expand global footprint with non-US customers contributing 41% of total revenue in the quarter.

• Inclusive of a $6.5 million charge for excess and obsolete inventory, attained an overall GAAP gross margin of 43% with product gross margin of 45% and services gross margin of 31%.

• Reduced GAAP operating expenses by 12% sequentially, from $111.6 million in the fiscal fourth quarter 2008 to $98.6 million in the fiscal first quarter 2009.

• Lowered adjusted (non-GAAP) operating expenses by 12% sequentially, from $96.2 million in the fiscal fourth quarter 2008 to $84.4 million in the fiscal first quarter 2009.

• Ended the quarter with cash, cash equivalents and short- and long-term investments of $1.1 billion, using $0.9 million in cash for operations during the quarter.

Ciena Corp. (Nasdaq: CIEN)