& cplSiteName &

Ciena Soars on Strong Demand

Ray Le Maistre
6/6/2014
50%
50%

Ciena spread some cheer for the optical transport sector Thursday following a strong second fiscal second quarter that defied concerns about AT&T's capex strategy, and an outlook that suggested even better times ahead. (See What's With AT&T's Capex Dip?)

Its numbers also put a smile on the face of its investors, as the vendor's share price jumped by $3.49, or 18.4%, Thursday to $22.48.

Ciena Corp. (NYSE: CIEN) reported revenues of $560 million for the three months to the end of April, up 10.3% from a year earlier. Net loss was $10.2 million, better than a year ago, while adjusted net income (after one-time costs are stripped out) was $19.4 million, and adjusted gross margin edged up to slightly to 43.1%. All these numbers were slightly better than expected. (See Ciena Reports Growth in Fiscal Q2 .)

One customer, believed to be AT&T Inc. (NYSE: T), generated a hefty 21.5% of total revenues in the quarter (about $120 million). Ciena's CEO, Gary Smith, said during the company's earnings conference call that the vendor's engagement with AT&T is spread across many parts of the operator's business, including its metro networks, optical backbone, submarine links, and mobile backhaul, supporting all manner of residential, enterprise, wholesale, and managed services.

What is encouraging for Ciena, though, is that these latest numbers don't look like a blip. The company is expecting fiscal third-quarter revenues in the range of $585-$615 million, significantly better than expected, while Smith repeatedly stressed how the company's customer base is expanding, so reducing its reliance on the Tier 1 operators in the US.

"As we continue to diversify our business, we expect to deliver steadily improving financial performance, including performance in the second half of the year that is stronger than the first half," said the CEO in the company's earnings announcement.

That broadening customer base, significantly, includes sales to customers beyond the traditional telecom operator segment: Ciena now generates about 30% of its sales from non-telco customers, including web services firms and data center operators that need high-capacity connectivity between data centers, cable operators (Ciena signed three new customers in the quarter), government agencies, and large enterprises in vertical markets such as financial services, utilities, and healthcare.

"We're helping customers drive service creation through models such as carrier managed services, and applications such as cloud services, data center interconnection and other applications that grow carrier revenues," said Smith during the earnings conference call Thursday.

The vendor is also growing its business in the submarine networks sector, and expects its business outside the US market to grow in the future as its partnership with Ericsson starts to deliver new business. In the fiscal second quarter, 42% of revenues came from non-US customers. (See How Will Ciena + Ericsson Play Out? and Ericsson's Ciena Tieup: It's a Migration Thing.)

The driving force for Ciena, though, is 100G. Revenues from its packet/optical portfolio, including 100G products, grew 22% year-on-year to $357 million, and Ciena said during its conference call that it had added 15 new 100G customers to take the total to 129.

In addition, MNM Partners analyst Mike Genovese pointed out that about 20% of its 100G revenues are now from metro network-related products, a sign that the metro 100G market is starting to ramp up. (See The Rise of 100G & Terabit Transport Networks.)

— Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading


Want to learn more about the evolution of packet-optical transport and the 100G market? Check out the agenda for Light Reading's Big Telecom Event (BTE), which will take place on June 17 and 18 at the Sheraton Chicago Hotel and Towers. The event combines the educational power of interactive conference sessions devised and hosted by Heavy Reading's experienced industry analysts with multi-vendor interoperability and proof-of-concept networking and application showcases. For more on the event, the topics, and the stellar service provider speaker lineup, see the BTE schedule.


(2)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
smkinoshita
50%
50%
smkinoshita,
User Rank: Light Sabre
6/6/2014 | 1:30:45 PM
Re: Long build-up...
@Ray:  How much would you hedge your bets on 100G Products?  I feel that there could be more growth from non-US customers.  Just speaking as a Canadian.
Ray@LR
50%
50%
Ray@LR,
User Rank: Blogger
6/6/2014 | 8:31:08 AM
Long build-up...
Ciena has been talking about a market uptick for quite a while -- what would be really impressive is if the company can set itself up for long-term stability and profitability, and not just a couple of good quarters. It does appear, though, that the likelihood of sustained business does look more likely now thahn in the past, and if Ciena pulls it off then it will be a credit to its strategy of the past few years.
From The Founder
Download our complete guide to de-risking NFV deployment in 2016, including:
  • An eight-step strategy to deploying NFV safely, based on input from the companies that have already started virtualizing their production networks.
  • Interviews with leading executives at Colt, AT&T, Deutsche Telekom, Cisco, Nokia, ZTE, Ericsson and Heavy Reading.
  • Flash Poll
    Live Streaming Video
    Prepping for the Future: Upskill U Explained
    During this short kick-off video, Doug Webster, Vice President of Service Provider Marketing, Cisco, and Light Reading’s CEO & Founder Steve Saunders give an overview of Upskill U.
    Telecom Innovators Video Showcase
    Atrinet's NetACE – Migration to NFV & SDN With NetOps-Driven LSO

    5|4|16   |     |   (0) comments


    At Atrinet's headquarters, Ray Le Maistre sits down with Roy Silon to get an in-depth look into the company's focus and the secret recipe for their success.
    LRTV Huawei Video Resource Center
    Amsterdam ArenA, Powered by Huawei

    5|4|16   |     |   (0) comments


    Huawei's ICT solutions power the state-of-the-art Amsterdam ArenA, turning it into a smart stadium.
    LRTV Interviews
    Testing When There's No 'There' There

    5|4|16   |     |   (0) comments


    The benefits of SDN/NFV are well known, but the transition comes with some challenges, prominent among them is: how do you test a network that has been abstracted and has the potential to be endlessly reconfigurable? Light Reading was at NFV World Congress in Santa Clara, Calif., where we bumped into Mats Nordlund, CEO and co-founder of Netrounds, a Swedish ...
    LRTV Interviews
    Ditching the Slash & the Orchestration Wars

    5|3|16   |     |   (2) comments


    SDN and NFV have been inextricably bound with each other for so long that on a conceptual level, smooshing them together into one catch-all phrase – SDNFV – is now justifiable, according to Dan Pitt, executive director of the Open Networking Foundation (ONF). Light Reading spoke to Pitt at the NFV World Congress, where he explained that the next ...
    LRTV Custom TV
    ZTE TV Connect Highlights

    5|3|16   |     |   (0) comments


    ZTE gives us a tour of its booth and new products at TV Connect in London.
    LRTV Custom TV
    Deluxe's Unified Delivery Solution

    5|3|16   |     |   (0) comments


    Join Alan Breznick of Light Reading and visit the Deluxe booth at NAB! Here you'll find Deluxe's Unified Delivery Solution, OTT video, virtual reality, HDR, 4K and much more!
    LRTV Interviews
    Verizon Puts Gray Boxes in the Shade

    5|2|16   |   04:33   |   (1) comment


    When it comes to the white box trend, "gray" boxes, which have a slight proprietary twist, don't give service providers and end users the advantages they're seeking, according to Verizon's Vice President of Product and New Business Innovation Shawn Hakl.
    LRTV Custom TV
    Dealing With a Disrupted Video Market

    5|2|16   |     |   (0) comments


    Ericsson's Simon Frost discusses how traditional pay-TV providers can cope with the big changes wrought by the rise of OTT video and IP technology.
    LRTV Custom TV
    The VNF Responsibility of Red Hat

    5|2|16   |     |   (0) comments


    At MWC, Caroline Chappell of Heavy Reading visits the Red Hat booth and sits down with Chris Wright to talk about the responsibility the VNF needs to take on in order to ensure the operators get the carrier-grade performance they expect for their network.
    LRTV Interviews
    AT&T Expert on the Key Pillars of UC

    4|29|16   |   03:58   |   (0) comments


    Vishy Gopalakrishnan, AVP of product marketing at AT&T, talks about the three developments that are making unified communications and collaboration secure and reliable for enterprise users.
    LRTV Documentaries
    LRTV Report: Mobile Core Innovation

    4|28|16   |   25:32   |   (0) comments


    Hear from multiple industry experts from Deutsche Telekom, SK Telecom, Heavy Reading, Huawei, Cisco, Ericsson, Nokia, NEC and many more about developments in the mobile core as operators virtualize their IMS and evolved packet core systems and prepare for a 5G world.
    LRTV Huawei Video Resource Center
    NFV World Congress Highlight

    4|26|16   |     |   (0) comments


    The highlight of the NFV World Congress contains exciting telecom news. Join us for an inside look at Huawei's ICT 2020 plan and its latest collaboration with industry leaders.
    Upcoming Live Events
    May 23, 2016, Austin, TX
    May 23, 2016, Austin Convention Center
    May 24-25, 2016, Austin Convention Center, Austin, TX
    September 13-14, 2016, The Curtis Hotel, Denver, CO
    December 6-8, 2016,
    June 16-18, 2017, Austin Convention Center, Austin, TX
    All Upcoming Live Events
    Infographics
    A new survey conducted by Heavy Reading and TM Forum shows that CSPs around the world see the move to digital operations as a necessary part of their overall virtualization strategies.
    Hot Topics
    WiCipedia: Woman Cards & Bitch Switches
    Sarah Thomas, Director, Women in Comms, 4/29/2016
    Amazon AWS Reports $2.6B Quarterly Revenue, Up a Colossal 64%
    Mitch Wagner, West Coast Bureau Chief, Light Reading, 4/28/2016
    Sprint CEO: Our Spectrum Is for 5G
    Dan Jones, Mobile Editor, 5/3/2016
    Amazon & Other 'Big 4' Cloud Providers Crushing Competitors
    Mitch Wagner, West Coast Bureau Chief, Light Reading, 4/29/2016
    FCC Poised to Re-Regulate Wholesale Access
    Carol Wilson, Editor-at-large, 4/28/2016
    Like Us on Facebook
    Twitter Feed
    BETWEEN THE CEOs - Executive Interviews
    In this latest installment of the CEO Chat series, Craig Labovitz, co-founder and CEO of Deepfield, sits down with Light Reading's Steve Saunders in Light Reading's New York City office to discuss how Deepfield fits in with the big data trend and more.
    Grant van Rooyen, president and CEO of Cologix, sits down with Steve Saunders, founder and CEO of Light Reading, in the vendor's New Jersey facility to offer an inside look at the company's success story and discuss the importance of security in the telecom industry.
    Animals with Phones
    Sloth Mail Click Here
    Sloth mail -- somehow even slower than snail mail.
    Live Digital Audio

    Of all the tech companies in the Valley, Intel has made the most aggressive commitment to building a diverse and inclusive workplace culture. It's doing so by taking concrete, measurable steps, making a large financial investment and through a commitment to complete transparency about its progress. In this radio show, WiC Director Sarah Thomas will be joined by Shlomit Weiss, Intel's Vice President, Data Center Group, and General Manager of Networking Engineering, who will share with us why Intel is tackling this huge challenge, how and to what effect. She will also discuss her unique experiences leading development of Client SOC development in the past and today leading development of all of the chipmaker's silicon hardware for networking IPs and discrete devices and managing a team of 600 engineers across Israel, Europe and the US.