Slowdown Smacks Ciena

Ciena Corp. (NYSE: CIEN) knew its fourth-quarter sales figures were going to be disappointing, but even the vendor's advance warning didn't predict the year-on-year sales dip that was unveiled Thursday morning. (See Ciena Reports Q4.)

In September, Ciena said it expected "fourth quarter revenue in a range of $190 to $210 million," way below Wall Street's expectations of $263 million and down on 2007's fourth quarter revenues of $216.2 million. (See Ciena Slumps on Q4 Outlook.)

But today the vendor reported revenues for its fiscal fourth quarter (which ended Oct. 31) of $179.7 million, down 17 percent year-on-year and down 29 percent compared with the third quarter. Its net loss after one-time items was $9.2 million, or 10 cents per share,

Even taking September's warning on board, financial analysts had, on average, been expecting revenues of $198.8 million and positive earnings (after one-time items) of 6 cents per share.

Wall Street's sages had also predicted revenues for the fiscal first quarter 2009 (which ends Jan. 31, 2009) of $190.5 million, but Ciena today said it expects sales in the current quarter to be "in a range of $170 million to $185 million."

"Our fiscal fourth quarter results clearly demonstrate the effects of a challenging macroeconomic and industry environment," noted CEO Gary Smith in the company's earnings news release. "Our short-term visibility is limited... as the rapidly unfolding macroeconomic climate causes increased capex scrutiny among our customers." (See Sizing Up AT&T's Cuts (and Chops) .)

“While we expect the current, challenging environment will persist through 2009, our goal and our focus is to manage our business to be both profitable on an as-adjusted basis and cash-flow positive for the year,” stated the CEO, who only a few months ago predicted the slowdown would be "shortlived." (See Ciena CEO: Slowdown Looks Shortlived.)

Not surprisingly, this morning's news wasn't well received by investors: In pre-market trading Ciena's share price was down by $0.61, more than 8 percent, to $6.95.

Ciena is among the vendors developing next-generation optical and carrier Ethernet products that, the vendor community hopes, will still manage to attract carrier capex during the economic downturn. (See Ciena Pushes 100-Gig, Ciena Thinks Big in Ethernet, and PBT: Alive 'n' Kicking.)

— Ray Le Maistre, International News Editor, Light Reading

malibu 12/5/2012 | 3:25:24 PM
re: Slowdown Smacks Ciena This company is in denial of the competative situation in which they find themselves. This is not a macro economic issue, it is a competative issue.
malibu 12/5/2012 | 3:25:22 PM
re: Slowdown Smacks Ciena materialgirl,

Not perhaps, but very definately INFN. I belive that there is a migration to highly integrated PIC based optical/ethernet infrastructure. Not withstanding the current cost/benefit advantage of INFN. It only gets better as time goes on. The macro environment will only hasten this migration. IMO

materialgirl 12/5/2012 | 3:25:22 PM
re: Slowdown Smacks Ciena Dear Malibu,
Who is the better competitor? Certainly not ALU or NT. Perhaps INFN? SCMR?

Perhaps the core director is old, however their mesh, packet-optical, software defined services and 100Gbps talk all sounds cutting edge to me. Therefore, in your opinion is part or all of their portfolio behind the curve? If everything is based on the core director, is it really all whipped cream on dog poo?
materialgirl 12/5/2012 | 3:25:20 PM
re: Slowdown Smacks Ciena thanks malibu. One knock on INFN is their lack of 100Gbps single link capacity, relative to the recent demo by CIEN. Some folks think their PIC tech will not go there and that they will need a completely new process. Do you see that as a problem?

Product sales at CIEN fell 22% year-on-year despite strong CN4200 sales. The core director must have died.
inauniversefarfaraway 12/5/2012 | 3:25:18 PM
re: Slowdown Smacks Ciena Any details on the homebrew FEC?

Where did they pilfer the code?

Must be desperate times indeed to betray their own...
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