Ciena Falls Short
That's what some Ciena Corp. (Nasdaq: CIEN) investors might be thinking after the company announced it will fall short of sales targets due to a late order that one analyst said is associated with the federal government's Global Information Grid Bandwidth Expansion (GIG-BE) project.
Ciena shares are set for a rocky day after the optical networking company said last night it will report revenue of approximately $66.4 million for its quarter ended January 31, which is a decline from the $70.6 million in revenue the company reported in the fourth quarter of 2003. Ciena had expected zero to 10 percent sequential sales growth in the quarter.
The company expects to report a loss per share for the fiscal first quarter in a range of $0.17 to $0.18.
In early morning trading, Ciena shares traded down $1.14 (15.64%) to $6.15.
The shortfall likely won't build confidence with investors, as Wall Street has been frustrated by the lack of accurate forecasting by the company in the past (see Ciena Dampens Outlook Hopes and Ciena Seeks R-E-S-P-E-C-T). Ciena executives downplayed the shortfall, saying it came down to one big order that could not be recognized in the quarter. They said the order is still being processed and will contribute to revenue growth in the next quarter.
"The delta between our current first quarter revenue expectations and our previous expectations can be attributed predominantly to the timing associated with a single order," said Gary Smith, Ciena's president and CEO, in a prepared statement.
In a note to clients issued this morning, Lehman Brothers analyst Steve Levy said the order may have been associated with the Defense Information Systems Agency's (DISA) GIG-BE project, for which Ciena is a supplier (see DISA Deal Is Done).
"All by itself, this is certainly not that big a deal," wrote Levy. "In fact, because Ciena did not have the lower margin transport revenues in its sales mix, gross profitability was actually higher than originally forecasted."
Smith said the late order is in process and the company still expects to recognize the revenue. He expects revenue growth of "up to 20 percent sequentially" in the second quarter of 2004.
— R. Scott Raynovich, US Editor, Light Reading