Ciena is due to report its fiscal fourth-quarter earnings Thursday morning, its first quarterly report since AT&T, one of Ciena two biggest customers, said last month that its overall 2015 capex would be lower than this year's total.
Even before AT&T's announcement, Ciena Corp. (NYSE: CIEN) already had dampened analyst expectations for its own fiscal fourth quarter. After its third-quarter report in September, Ciena said fourth-quarter revenue likely would be in the range of $570 million to $610 million, a lower range than the consensus analyst estimate. (See Ciena Ramps in Q3, Dampens Q4 Expectations.)
The stock values of Ciena and several other vendors took a hit after AT&T's early November capex statement, and the news looked especially bad for Ciena and other vendors that for months been suggesting that 2015 would bring a carrier capex bonanza. Verizon followed up with its own capex comment this week, saying it would increase wireless capex next year, but cut wireline capex. (See AT&T's Mexican Capex Dance and Ciena's Smith: Revenue Dip Short-Term.)
AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) together account for as much as 30% of Ciena's revenue, according to Michael Genovese, managing director of MKM Partners. However, Genovese wrote in a recent research note that Ciena still can take advantage of demand for its products that is "strong and broad-based," from customers outside of those top two telcos, including cable TV firms, corporate enterprises and overseas service providers.
Ciena also recently upped its ability to compete amid the virtualization revolution, announcing a virtual network function software platform and marketplace. (See Ciena Amps Up Software Play, Attacks VNF 'Agility Gap'.)
Ciena's share price is down nearly 1.4% today to $17.35.
— Dan O'Shea, Managing Editor, Light Reading