Wednesday, September 3, 2008

Ciena Posts Solid Q3 Revenues, Cautions on Q4 Outlook

Ciena reported revenue of $253.2 million for its fiscal third quarter ended July 31, 2008, representing a 5% sequential increase from fiscal second quarter 2008 revenue of $242.2 million, and an increase of 24% over the same period a year ago when Ciena reported revenue of $205 million. Ciena's net income (GAAP) was $11.7 million, or $0.12 per diluted common share. This compares to fiscal second quarter GAAP net income of $23.8 million, or $0.23 per diluted common share, and a reported GAAP net income of $28.3 million, or $0.29 per diluted share, for the same period a year ago.

Ciena said non-U.S. customers drove 38% of revenue in the quarter. The was a GAAP gross margin of 49.6% with product gross margin of 52% and services gross margin of 34%.

Ciena also struck a cautious note for the current quarter.

"In addition to existing customer-specific challenges, we have recently begun to experience order delays from many of our Tier One service provider customers, which we attribute to their guarded approach to capital expenditures given the uncertain macroeconomic environment," said Smith. "While we've seen no project or order cancellations, sales cycles are lengthening and some deployments are slowing. As a result, we now expect fiscal fourth quarter revenue in a range of $190 to $210 million."

"While current economic conditions warrant a cautious near-term outlook, the fundamental drivers of our business -- growing capacity demands and the transition to more efficient, more powerful, automated networks -- remain sound. We are confident that our portfolio and value propositions are differentiated, positioning us to take advantage of what is predicted to be a longer-term investment cycle in the transition from SONET/SDH to Ethernet-based networks," said Gary Smith, Ciena's president and CEO.