Ciena Narrows Q1 Loss

Ciena Corp. (NYSE: CIEN) delivered first-quarter numbers almost exactly in line with market expectations this morning, posting a greatly reduced net loss of just $6.3 million, or 1 cent per share, from revenues of $120.4 million, up 27 percent from a year earlier. (See Ciena Reports Q1.)

In the same quarter a year earlier, Ciena lost 10 cents per share from revenues of $94.7 million. (See Ciena Shows More Revenue, More Loss.) CEO Gary Smith said revenues for the second quarter could rise as much as 7 percent, including initial income from Ciena's involvement in BT Group plc (NYSE: BT; London: BTA)'s 21CN next-generation network. A 7 percent hike would take the current period's revenues to more than $128 million, ahead of analyst expectations. (See Vendors Sign BT 21CN Contracts and BT's 21CN Deals: Booty or Bloody? )

All this, and an increase of 2 percentage points in gross margins to 41.9 percent, wasn't enough to satisfy Wall Street, though, as Ciena's stock dipped 28 cents, more than 6 percent, to $4.15 in pre-market trading.

Clearly, investors had been expecting something special, as the vendor's share price had leaped 33 cents, more than 8 percent, to $4.35 on Wednesday.

On the company's conference call, CFO Joseph Chinnici said nearly 46 percent of the quarter's revenues came from just three North American customers, all of which are buying Ciena's long distance, metro, and access products.

CEO Smith said the vendor has seen an increase in order activity in recent weeks, with increasing activity from carrier and enterprise customers. He singled out the CN 4200 FlexSelect platform as a product that is attracting increasing interest as "Ethernet transport is growing fast." He noted its selection by BT, Swisscom AG (NYSE: SCM), and Progress Telecom LLC . (See Ciena Claims DWDM Coup, Ciena Wins in Slovenia, Ciena Wins at Progress, and Ciena Finalizes BT Agreement.)

Smith also said demand from enterprise customers, particularly in finance, retail, and healthcare, is growing as "they turn increasingly to carrier-class products," adding that Ciena is generating business through channel partners such as EMC Corp. (NYSE: EMC). (See EMC, Ciena Cosy Up.)

The CEO added that demand in Europe extends well beyond BT's high-profile 21CN plans. "Neuf Cegetel Group (Euronext: NEUF), Swisscom, and others, including in Eastern Europe, are all looking to do more," while Ciena is also experiencing demand from government and research organizations in Europe.

— Ray Le Maistre, International News Editor, Light Reading