Wintry weather through the mid-Atlantic region parked Ciena executives at a hotel to host the company's fiscal first quarter 2015 earnings call Thursday, and as it happened, some of Ciena's financial markers for the quarter did not weather so well either.
However, Ciena Corp. (NYSE: CIEN) officials balanced the negative news with an announcement that the vendor had won a metro packet optical deployment contract from Windstream, as well as metro deals with three service providers in Europe.
For the fiscal first quarter, the vendor reported revenue of $529.2 million, which missed its own guidance of $540 million to $570 million, as well as analyst estimates. Revenue was down about 1% year-on-year, but off 10% from the $591 million Ciena brought in during its fiscal fourth quarter. The company did post a non-GAAP profit of $13.6 million and earnings per share of $.0.12. Its GAAP-adjusted net loss was $18.8 million. (See Ciena Revenue Down, Misses Analyst Estimates.)
Ciena CEO Gary Smith put most of the blame for the revenue miss on foreign exchange rates affected by a stronger US dollar and delayed revenue realization from US government orders. He said revenue from that order would be realized in the second quarter.
Smith also continued to talk big about how Ciena is rapidly diversifying its customer base and revenue sources with the emergence of data center deployment opportunities and other metro 100G applications. Non-telco customers made up more than a third of Ciena's revenue in the first quarter. "Our second largest customer in the quarter, like last quarter, was a major web-scale player," he said.
Yet, the Windstream deal is evidence that opportunities within the traditional telco market are not diminishing either. As with non-traditional customers, much of the excitement is around metro. Metro 100G shipments during the quarter amounted to more than a third of the company's total 100G shipments for the period, Smith said.
Also, Smith said the metro 100G upgrade cycle just beginning is one that will be measured over many years, and not just over and done within a matter of a few quarters. "We believe that metro is a market opportunity that is two to three times larger than traditional long-haul," he said. "What's different about this metro upgrade [compared to past upgrade cycles] is it's grounded in real business models where are people making money, and real applications. It will be a massive requirement for the next 5-10 years."
— Dan O'Shea, Managing Editor, Light Reading