Ciena +8.1% on FQ3 beat, guidance; peers/suppliers also up

|About: Ciena Corporation (CIEN)|By:, SA News Editor

Ciena (CIEN) expects FQ4 revenue of $550M-$580M, mostly above a $551.4M consensus.

Sales of integrated Ethernet switching/optical networking gear (Converged Packet Optical) rose 3% Q/Q and 23% Y/Y in FQ3, and made up 56% of revenue. That could be a positive for Cyan (CYNI - previous).

Ethernet switch sales (packet networking) +14% Q/Q and +104% Y/Y, and now 11% of revenue. Optical transport hardware +15% Q/Q but -26% Y/Y, and 12% of revenue. Software/services +7% Q/Q and +1% Y/Y, and 20% of revenue.

As Cisco and Juniper can vouch, demand for metro/edge networking hardware (such as Ciena's converged packet optical gear and Ethernet switches) has been strong lately.

Gross margin was 43.6%, +110 bps Q/Q and +400 bps Y/Y, and reversing FQ2's Q/Q decline. It's expected to be in the low-40s in FQ4. Opex -3.5% Q/Q and only +8% Y/Y,  op. margin jumped to 8.2% from 3.7% in FQ2.

International customers made up 37% of revenue vs. 43% in FQ2. Two customers (possibly AT&T/Verizon) accounted for 31.8% of revenue, nearly even with FQ2.

Infinera (INFN) +6.9%, JDS Uniphase (JDSU) +2.5% and Finisar (FNSR) +2.8% in sympathy.

Ciena also jumped following its FQ2 results. Needham's July call was on the mark.

FQ3 results, PR