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Ciena Corp. (NYSE:CIEN) is scheduled to release its fourth quarter 2011 results before the opening bell on December 8, 2011. In the run-up to the earnings release, no major variation in analysts’ estimates was noticed.

Prior-Quarter Recap

In third quarter of 2011, Ciena narrowed its losses significantly on the back of revenue growth across its business segments, a favorable product mix and lower operating expenses. For further details please read: Ciena Trims Losses

Current Quarter Expectations

Ciena expects fourth quarter 2011 revenues in the range of $440.0 million to $460.0 million. The Zacks Consensus Estimate was $ 475.0 million when the company reported results but has since been revised to $455 million, taking into account the disappointing guidance.

Adjusted gross margin is projected to be in the low 40% range, consistent with the company’s near-term expectation. However, management expects adjusted operating expenses to be in the upper $170 million range.

For the fourth quarter of 2011, the company did not provide any earnings per share guidance.

Estimate Revision Trend

None of the five analysts covering the stock revised their estimates in the last 30 days. Therefore, there were no changes to the EPS estimate, which projects a loss of 5 cents in the upcoming quarter. Analyst estimates range from a loss of 13 cents to a gain of 2 cents.

For fiscal 2011, none of the four analysts covering the stock has changed their estimates in the last 30 days and the Zacks Consensus was pegged at a loss of 60 cents.

Analysts covering the stock opine that Ciena will drive top-line growth and margins on the back of favorable product mix and increase in adoption of 40/100G systems, switching and wireless backhaul solutions. Moreover, analysts are hopeful that factors such as Ciena’s leading technology, existing relationships and product pipeline will favorably impact the company in the long run.

However, weak spending patterns from its customers such as AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ) are a cause of concern in the near term.

Conclusion

Ciena posted a positive average earnings surprise of 39.2% in the trailing four quarters, implying that the company either surpassed or was in line with the Zacks Consensus Estimate over the same period. The company is expected to post another positive surprise in the upcoming quarter.

Near-term results are expected to remain under pressure due to increased expenses, slowdown in carrier spending, continued losses, and intensifying competition from Cisco Systems Inc. (NASDAQ:CSCO) and Alcatel-Lucent (NYSE:ALU).

Despite the near-term headwinds, we anticipate a recovery based on favorable operational execution and the new product line up. These are expected to lead to a gradual improvement in results in 2012.

We have a long-term Neutral recommendation on Ciena shares. Ciena currently has a Zacks #3 Rank, implying a short-term Hold rating.

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Source: Ciena Corp. Earnings Preview