Ciena reports a Q2 loss, lowered revenue outlook

Ciena reported a quarterly loss and lower revenues but noted that bandwidth demand is strong and telcos are still spending to add capacity and improve network automation.

Phil Harvey, Editor-in-Chief

June 6, 2024

2 Min Read
(Source: Kabataan/Alamy Stock Images)

Telecom networking giant Ciena reported a second quarter loss and sagging network equipment sales. However, the vendor buffered the news with expectations that the struggling telecom sector is working its way through its inventory backlogs and that network automation and AI are still top of mind as capex drivers.

Ciena reported a quarterly net loss of $16.8 million, or 12 cents a share, on revenue of $910.8 million. The company's revenue fell by 20% compared to the year-ago period when Ciena was wrestling with an order backlog that was "at least double the normal amount," Light Reading reported.

Ciena's CEO Gary Smith told Light Reading back then that orders weren't being canceled. Service provider customers were slowing spending and pushing orders to later quarters, and, by extension, Smith and the company were not moving products as quickly as they'd once hoped.

A year later, the backlog guessing game continues, but inventory levels and supply chain hiccups are less of an issue. Service provider customer orders are still being kicked around the calendar but Ciena reported that it reduced its backlog by $300 million quarter-to-quarter; the backlog stands at $1.9 billion.

Smith noted in the company's Q2 call that the industry dynamics are unchanged – demand still exists, the need for more bandwidth is growing and the buildout of infrastructure to support AI applications will ensure that capacity challenges remain. 

In the company's earnings press release, Smith is quoted as lauding the strength of Ciena's business "amid a challenging near-term environment as service providers continue to work through existing inventory."

It'd be more alarming if Ciena's revenues were entirely tied to telecom. They're not; nearly half the company's revenue comes from cloud providers, government entities and cable operators. Nearly a third of its revenue during the quarter came from outside the US, with revenue from India growing 16% sequentially, the company said.

Ciena projects that its revenues for next quarter will be between $880 million and $960 million. That assumes the US economy doesn't significantly worsen, and the company doesn't see any major delays in delivering its backlogged inventory to service provider customers. 

About the Author(s)

Phil Harvey

Editor-in-Chief, Light Reading

Phil Harvey has been a Light Reading writer and editor for more than 18 years combined. He began his second tour as the site's chief editor in April 2020.

His interest in speed and scale means he often covers optical networking and the foundational technologies powering the modern Internet.

Harvey covered networking, Internet infrastructure and dot-com mania in the late 90s for Silicon Valley magazines like UPSIDE and Red Herring before joining Light Reading (for the first time) in late 2000.

After moving to the Republic of Texas, Harvey spent eight years as a contributing tech writer for D CEO magazine, producing columns about tech advances in everything from supercomputing to cellphone recycling.

Harvey is an avid photographer and camera collector – if you accept that compulsive shopping and "collecting" are the same.

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