Ciena: 'Flat to Up'
That qualifies as good news in the roughed-up telecom equipment market. Ciena's stock popped $0.18 (3.26%) to $5.20 in early morning trading.
On a generally accepted accounting principles (GAAP) basis, Ciena reported a net loss for the period of $107.1 million, or $0.25 per share.
Ciena's executives also issued some lukewarm guidance for the next quarter, predicting the potential for more sequential growth.
“We believe revenue in our second quarter could be in a range of between flat and up slightly from our first-quarter revenues, depending on order timing,” says CEO Gary Smith.
In the current market, anything but a decline in revenues is considered good, as companies have been lowering their cost structures. Ciena's slim growth forecast also comes in the context of networking industry giant Cisco Systems Inc.'s (Nasdaq: CSCO) "flat to down" prediction for its coming quarter.
However, some analysts contend Ciena still has not cut enough of its expenses. Steve Levy, an analyst with Lehman Brothers, says he regards the earnings news as "slightly better than expectations," but the guidance "slightly less than expectations."
"Ciena has a long ways to go before they break even, and the valuation on the stock gives them no room for mistakes," he says. "The very high break-even level is not likely to be achieved any time soon."
Ciena still has a considerable cash hoard, and the company used some of that cash to pay down some debt. The company ended its fiscal first quarter with cash and short- and long-term securities valued at $1.9 billion. Ciena burned through $43 million in the first quarter, exclusive of money it used to buy back debt. During the quarter, the company spent an additional $139.2 million in cash to repurchase debt.
Ciena also disclosed that it had made a cash payment of $2.5M in the settlement of a patent lawsuit with Nortel Networks Corp. (NYSE/Toronto: NT). It acquired this lawsuit when it bought ONI Systems (see Nortel, Ciena Settle Suit).
— R. Scott Raynovich, US Editor, Light Reading