A New Spending Cycle -- The Most Important Two Minutes From Ciena's Conf Call (CIEN)

| About: Ciena Corporation (CIEN)

From Ciena's conference call (full transcript here). CEO Gary Smith is talking:

Going forward, the challenges we’re facing will be substantially different than those we’ve faced for the last several years. Going forward, I believe more of our challenges will be tied to growing and scaling the business. For instance, last quarter we talked about the onset of what seemed to be a trend toward larger order sizes for many of our service provider customers. The good news is, we’re seeing this trend continue. But in addition to driving fluctuations in cash use as was the cash with our increased inventory this quarter, larger order sizes can introduce the potential for quarter to quarter revenue fluctuation on top of what is otherwise a steadily growing business. We’re not saying this will happen, we’re just reminding you that it could.

In addition, for the first time in many years, we’re facing challenges associated with ramping to meet demand. These are challenges we’ve faced before and we’re working through them but it does require working closely with our supply chain including contract manufacturers and component suppliers.

To recap on our expectations for 2006 overall, we expect our specialist positioning will enable us to continue to grow faster than the market. New bandwidth demands and the need for network transition are fueling what seems to be the onset of a new spending cycle and Ciena is well positioned to benefit from this.