Telecom-Equipment Maker Ciena Posts Surprise Loss -- Update

By Angela Chen 

Ciena Corp. reported a surprise loss in the October quarter, as revenue growth in its biggest network segment was unable to offset expected hits from a supplier agreement with AT&T Inc.

Shares fell 3% in premarket trading.

The telecom-equipment maker had earlier warned that uncertainty tied to the timing of potential orders, as well as concessions related to its recent supplier agreement with AT&T would dent its revenue in for the fourth quarter.

Early-stage network deployment and other related costs could put pressure on margins, while certain upfront incentives and concessions as part of its agreement to be a Domain 2.0 supplier for AT&T will have a disproportionate impact on the quarter's revenue and margins. These are expected to be short-term factors.

Higher demand in the optical-gear market has been helping the company improve its revenue in recent periods. Ciena has also upgraded and diversified its offerings while broadening its base of customers.

For the fourth quarter ended in November, Ciena posted a loss of $30.7 million, or 29 cents a share, compared with a loss of $9.8 million, or nine cents a share, a year earlier. Excluding special items, the loss became eight cents a share, compared with a profit of 16 cents a share a year earlier.

Analysts polled by Thomson Reuters had called for 12 cents a share in earnings.

Revenue ticked up 1.3% to $591 million, in line with the company's projection of between $570 million to $610 million, and slightly above analyst predictions of $589 million.

Converged packet optical revenue, Ciena's biggest top-line contributor, grew 9.2% to $383 million. Software and services revenue climbed 5,1% to $125 million.

For the current quarter, Ciena expects revenue of $540 to $570 million. Analysts had called for $567 million.

Write to Angela Chen at [e-mail]

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