Ciena Cuts 200 Jobs as Sales Plummet

Equipment firm Ciena Corp. (NYSE: CIEN), which has been trying to allay fears of a market slump, reported worse than expected sales and earnings today, prompting an immediate round of cost-cutting that will see 200 staff, about 9 percent of its total workforce, made redundant. (See Ciena Dips in Q1.)

The news also prompted a 6.4 percent pre-market fall in Ciena's share price to $5.00.

The job cuts will affect all parts of the company in every market, the vendor noted. And as part of its cost-cutting measures, Ciena is shutting its Acton, Mass., research-and-development facility within the next four months.

The vendor had warned previously that it would cut its cost base if the market deteriorated. (See Ciena: This Ain't No 2001! and Slowdown Smacks Ciena.)

And it's clear that, for Ciena at least, current trading is getting much tougher.

It reported revenues for its fiscal first quarter (ended January 31) of $167.4 million, down a massive 26 percent from a year earlier. Analysts had forecast a significant fall but, on average, had expected sales to come in at nearly $172 million.

The company reported a net loss of $24.8 million. In the same period last year, Ciena reported a profit of $28.8 million.

The vendor's net loss after one-time costs (also known as non-GAAP net loss) was $8.3 million, or 9 cents per share, 2 cents worse than Wall Street's finest had expected.

Ciena believes the latest round of cuts will bring its adjusted operating expenses (opex) down to $80 million per quarter. Previous efficiency measures had reduced adjusted opex to $84.4 million in the fiscal first quarter from $96.2 million in the prior quarter.

Cash conservation is key to Ciena's operating strategy at the moment. "We are managing our business with the expectation that current macroeconomic realities will continue to pressure our customers’ spending levels,” stated CEO Gary Smith in a prepared statement.

One of the company's main customers is AT&T Inc. (NYSE: T), which recently announced it plans to cut its 2009 capex budget by up to 15 percent. (See AT&T Cuts Capex by up to $3B.)

With carrier spending patterns up in the air, Ciena isn't providing any financial outlook. "With the current macroeconomic and industry volatility, and as our customers continue to delay and more carefully scrutinize capital expenditures, our short-term visibility is extremely limited. As a result, we are not in a position to provide revenue guidance for the fiscal second quarter 2009," stated Smith, who is still chipper about the future.

"We remain confident in the fundamental demand drivers of our target markets and focused on our long-term goal of emerging from this challenging period positioned to drive future revenue and EPS growth," he said.

Ciena ended January with more than $920 million in cash, cash equivalents, and short-term investments.

— Ray Le Maistre, International News Editor, Light Reading

digits 12/5/2012 | 4:10:11 PM
re: Ciena Cuts 200 Jobs as Sales Plummet Ciena's closure of the Acton, Mass. R&D plant means the end of what wsa left of Wavesmith, the multiservice switch company Ciena acquired in 2003.

Ciena says the closure of the facility won't impact ongoing business -- the technology acquired has already been integrated into the CoreDirector and CN4200 platfroms, and Ciena believes ongoing development can continue at its other R&D facilities.

cw.774 12/5/2012 | 4:10:09 PM
re: Ciena Cuts 200 Jobs as Sales Plummet so what...
'thought that happened 4 years ago
digits 12/5/2012 | 4:10:07 PM
re: Ciena Cuts 200 Jobs as Sales Plummet Just to clarify - I was referencing the physical, geographical location -- so 'wave' goodbye to the R&D site that came on board with the Wavesmith acquisition.

opticalguy 12/5/2012 | 4:10:06 PM
re: Ciena Cuts 200 Jobs as Sales Plummet Ray,
One reason for shutting down that Acton, Mass R&D plant site is a decision made by Ciena to stop funding the Wavesmith product months ago. Given that, there clearly lies a hole in their product line and needs to be filled by some new technology. Ciena has previously laid off a lot of Wavesmith centric folks so this looks to be the completion of their direction and their need (hole) in their product line.
Is there anything out there that Ciena could pick up (needs to be cheap) to fill this gap? Their stock price is down so I would think it would need to be a real good price if it were an acquisition.
heretoday 12/5/2012 | 4:10:04 PM
re: Ciena Cuts 200 Jobs as Sales Plummet Bill Leighton, as reported here in LR, is making decision to include shutting down to save their cash. You'd think SS would be ripe for picking to get access to that cash rather than the technology.

For a variety of reasons, they may need to park for awhile unless a major vendor or investor is willing to carry them. That vendor would have to see Soapstone as a critical component in their product solutions. Anyone out there in that position? Ciena doesn't really need it to win business.

I think I'd park the technology and save my cash... my sense is we're all going to retrench and focus on the growth areas that don't really need this, like Ethernet Fiber Access in the US rural unserved/underserved market. And find ways to haul all of that over the imbeded metro transport, which won't likey ever interact with something like an off box control plane.

Physical_Layer 12/5/2012 | 4:10:04 PM
re: Ciena Cuts 200 Jobs as Sales Plummet Sounds like carriers are not pushing towards carrier ethernet as fast as Ciena would like.

Does anyone think this will accelerate a sale or shutdown of Soapstone? The thing trades way under cash value.
0x007 12/5/2012 | 4:09:14 PM
re: Ciena Cuts 200 Jobs as Sales Plummet

Rumor has it some of the former wavesmith engineers have approached an original wavesmith investor along with an orginial wavesmith engineering manager to buy the wavesmith IP from ciena and to spin it out as an independent company.


In other news, millions await the debut of Microsoft's "Xbox," stamps cost 34 cents, gas costs $1.46 and did you SEE Britney Spears Superbowl half time show?!


Are you reeling in the years....

right_leading 12/5/2012 | 4:09:10 PM
re: Ciena Cuts 200 Jobs as Sales Plummet ...would be like turning a battle ship in a harbor!
klamp48 12/5/2012 | 4:07:37 PM
re: Ciena Cuts 200 Jobs as Sales Plummet I remember working for them in the late 90's early 2000's Man what a big change. All good things must come to pass.
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