Seeking Alpha
Profile| Send Message| ()  

By David Gibbs

Ciena Corporation (CIEN) provides communications networking equipment and the software and services that support the transport, switching, aggregation and management of voice, video, and data traffic. The company has has registered quarterly losses for nine consecutive quarters.

Earnings: 4Q loss of $80.3 million ($0.86/share) versus a 4Q09 loss of $26.7 million ($0.29/share). Excluding charges relating to acquisitions, CIEN lost $0.18/share last Q and $0.12/share during 4Q09.

Revenue: Up more than 100% YOY to $417.6 million.

Actual Versus Wall St. Expectations: CIEN fell short of analyst expectations, as consensus estimates were pegged at a $0.15/share loss. Revenue came in ahead of September guidance.

Notable Stats:

  • CIEN forecasted current-quarter revenue of $410 million-$430 million versus expectations of $414 million.
  • Q4 performance includes $255.6 million in revenue from the acquired assets of the Metro Ethernet Networks business of Nortel (NT).
  • Gross margin fell to 40.3% from 44%.

Did You Hear That? Management stated during the conference call:

While current macroeconomic conditions are still causing some caution in customer spending, the continuing strength in the fundamental demand drivers of our business and progress on our integration gives us confidence in our ability to achieve our operating targets. We expect fiscal first quarter 2011 revenue to be in the range of $410 million to $430 million and adjusted gross margin to be in the low 40s range.

Analysts at S&P stated that they have narrowed their, “FY 11 (Oct.) loss estimate by $0.40 to $0.45 loss. On revised relative analysis, we raise our 12-month target price by $3 to $19.”

(See earnings conference call transcript here.)

Technicals: Shares popped following last week’s earnings release and are currently just shy of new 52-week highs. The stock’s 10-week moving average has broken upward through its 40-week average, and volume has increased in three consecutive weeks. All are bullish signals and a breakout to new highs may be a precursor to another leg higher.

Commentary: CIEN has been losing money for several years, but impressive sales out of the recent Nortel acquisition may be a sign of better things to come. Analysts are currently forecasting that the company will be in the black by F2Q11. If they can follow through on those expectations, now may be a good opportunity to toe the water for those of you seeking data networking exposure.

(Click to enlarge)

Disclosure: No position

Source: Earnings Cheat Sheet: Ciena Nears New Highs on Heels of Strong Guidance