Ciena Offers Hope
Ciena Corp. (NYSE: CIEN) today reported a sequential increase in sales that beat Wall Street's expectations, and although it reported a loss, the damage to its bottom line wasn't as bad as expected. (See Ciena Reports Q3.)
The Linthicum, Md.-based optical, Ethernet, and access equipment vendor generated fiscal third-quarter (ended July 31) revenues of $164.8 million, and a net loss, under GAAP (generally accepted accounting principles), of $26.5 million, or 29 cents per share.
Compared to how the company did during the same period a year ago -- revenues of $253.2 million and a net profit of $11.7 million -- the numbers look disastrous.
But carrier spending patterns have altered significantly during the past year, despite the best efforts of Gary Smith, Ciena's CEO, to scare off the recession with some fighting talk. (See Ciena: Carriers Need to Spend Soon, Ciena: This Ain't No 2001!, and Ciena CEO: Slowdown Looks Shortlived.)
The good news for Ciena is that its revenues have at least risen sequentially, as the company said they would, compared with the miserable second-quarter total of $144.2 million. (See Charges Drag Ciena Deep Into the Red.)
Even better for Smith and his team is that sales were better than the average forecast of the analyst community, which expected fiscal third-quarter revenues of $152.6 million.
Those analysts also expect Ciena's non-GAAP net loss (the loss after one-time costs and charges) to come in at 13 cents per share, but Ciena did better than that, with a non-GAAP net loss of 5 cents per share.
Ciena's gross margin also improved sequentially, coming in at 45.3 percent, slightly better than in the previous quarter.
All of this gave the company's stock a boost early Thursday. In pre-market trading, Ciena's share price added $0.83, nearly 6.8 percent, to rise to $13.10.
But it's not all positive news.
In the company's initial earnings statement, CEO Smith noted that "industry sentiment has improved somewhat over the first half of the calendar year as a result of what seems to be a stabilizing macro environment combined with continued pressure on service providers to increase network capacity and deliver more services."
However, he's not anticipating a sudden rush of increased capital expenditure by carriers. "Customers in general continue to spend cautiously. As result, we expect our fiscal fourth quarter revenue will be roughly flat with our fiscal third quarter level."
So the worst might be over, but better times are still over the horizon, it would seem.
Smith and his team are set to provide further insights into the company's results and outlook during a conference call early Thursday.
— Ray Le Maistre, International News Editor, Light Reading