But investors find a way to worry, citing its WWP acquisition as a possible drag on this year's earnings

Raymond McConville

June 5, 2008

1 Min Read
Ciena Stays Strong in Q2

Ciena Corp. (NYSE: CIEN)’s winning streak of strong fiscal quarters continued today as the company once again beat Wall Street’s expectations. (See Ciena Reports Q2.) But despite the good results, Ciena’s stock has fallen $1.33 (4.4%) to $29.13 this morning.

Ciena also reaffirmed its optimistic outlook for the remainder of 2008, which calls for 27 percent revenue growth and 15 percent adjusted income growth. But investors seem concerned that Ciena's acquisition of World Wide Packets Inc. could add more to the company’s operating expenses than expected, hobbling the company's 15 percent income growth target. [Ed. note: And Wall Street just looooves surprises.]

“They suggested on the call that operating expenses have increased,” says Simon Leopold of Morgan Keegan & Company Inc. “That’s likely from World Wide Packets and other stuff, and it suggests operating income could be lower in the July quarter than the April quarter.”

Analysts had feared from the start that Ciena overpaid for the Ethernet access firm. (See Did Ciena Overpay for WWP? and Ciena Takes Out World Wide Packets.)

Ciena’s non-GAAP income of 40 cents per share beat analyst estimates of 37 cents per share, according to Reuters Research . Net income for the quarter rose 83 percent year over year from $13 million to $23.8 million.

— Raymond McConville, Reporter, Light Reading

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