Is Ciena's Miss a Cause for Panic?
Ciena reported Tuesday that revenues in its financial first quarter, which ended Jan. 31, would be about $415 million instead of the expected $435 million to $455 million. That news sent the company's share price tumbling by 8.4 percent to $15.58 by the end of the trading day.
But MKM Partners analyst Mike Genovese stated in a research note that the lower guidance is "purely a revenue recognition issue and not an indication of weakness in underlying demand," with the shortfall in expected revenues expected to be reported (or "recognized") in following quarters.
Genovese added that "recent supply chain checks, market research and competitor guidance suggest solid demand for Ciena's products" as network operators update and upgrade their transport infrastructure.
George Notter at Jefferies & Company Inc. was more cautious, however. "While the company is attributing the miss mostly to international projects, we suspect Ciena might also have seen some softness in their North American business," wrote Notter in his reaction to Ciena's announcement.
He noted that other vendors experienced "softness" from North American carriers toward the end of 2011, and that Ciena could see an upturn in business from the likes of AT&T and Verizon in the coming months as capital spending strengthens.
However, Notter added there are still "longer-term concerns about the company’s growth rate and profitability."
Ciena's share price is down a further 1.35 percent Wednesday to $15.37.
— Ray Le Maistre, International Managing Editor, Light Reading