Ciena's Q2 Let Down by MEN

Ciena Corp. (NYSE: CIEN) today reported fiscal second-quarter revenues of US$253.5 million, comprising $200 million from its pre-acquisition lines of business and $53.5 million from the optical and Ethernet equipment business it acquired from Nortel Networks Ltd. . (See Ciena/Nortel Product Plans Revealed, Ciena Closes Nortel MEN Purchase, and Ciena Beats NSN to Buy Nortel's MEN.)

The former Nortel MEN (Metro Ethernet Networks) business has only been on Ciena's books a short while, so it only delivered six weeks of revenues in the vendor's second quarter, which ended April 30.

Still, analysts had been expecting better from the former Nortel unit. On average, Wall Street had been expecting total Q2 revenues of $268 million, with the MEN business contributing around $75 million to $80 million.

Ciena noted that it couldn't record an unspecified level of deferred revenues from the MEN business, but even with that caveat, the number is still disappointing. At the current rate, the MEN business is generating $8.9 million in recognizable revenues per week, or roughly $116 million in a 13-week quarter. In the first quarter of 2010, the MEN division, while still part of Nortel, reported revenues of $216 million.

As for Ciena's non-MEN business, revenues were up 14 percent sequentially from the fiscal first quarter, and 39 percent better than a year ago. (See Ciena Misses in Q1 and Charges Drag Ciena Deep Into the Red.)

That performance looks to have been helped by a ramp in sales to AT&T Inc. (NYSE: T). Ciena said it had two (unidentified) customers that generated more than 10 percent of its sales, with the duo together generating 42 percent, or $106.5 million, of its total second-quarter revenues.

The vendor's bottom line took a hit, though. Including one-time costs and charges, Ciena recorded a net loss of $90 million. Without those charges, Ciena was still in the red to the tune of $11.7 million, or 13 cents per share. Analysts had been expecting worse, though, anticipating a loss of 27 cents per share after charges.

Looking ahead, Ciena said it expects revenues in the current third fiscal quarter to be in the range of $375 million to 400 million, in line with Wall Street's expectations.

— Ray Le Maistre, International Managing Editor, Light Reading

digits 12/5/2012 | 4:32:55 PM
re: Ciena's Q2 Let Down by MEN

conf call is bringing out more detail - follow-up story to come


digits 12/5/2012 | 4:32:55 PM
re: Ciena's Q2 Let Down by MEN

The smaller than expected non-GAAP loss and outlook for Q3 appears to have cheered investors - Ciena's share price is up nearl 3.7 percent to $14.35 in pre-market trading. The earnings conference call is still to come, tho. 

digits 12/5/2012 | 4:32:40 PM
re: Ciena's Q2 Let Down by MEN

Analyst consensus appears to be that Clearwire is the second of two 10%+ revenue customers in Ciena's Q2 (the other being AT&T).

Ciena announced its backhaul equipment engagement with Clearwire in July 2009:

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