Ciena: An Always-Volatile Play On Telecom And Data Center Spending
Stephen Simpson, CFA
Stephen Simpson, CFA
Ever-Volatile Ciena Doing Well In 100G
Stephen Simpson, CFA
Stephen Simpson, CFA
Ciena Goes Back Into The Penalty Box
Stephen Simpson, CFA
Stephen Simpson, CFA
Jul. 29, 2014, 11:18 AM
- Cyan (CYNI +5.7%) is getting a lift from news major customer Windstream plans to spin off its network assets into a REIT. Windstream predicts the move will allow it to "accelerate broadband investments, transition faster to an IP network and pursue additional growth opportunities to better serve customers."
- Soft orders from Windstream have taken a toll on Cyan in recent quarters. Windstream fell to less than 10% of revenue in Q1, but CEO Mark Floyd expressed optimism on the CC (transcript) Windstream would increase orders for Cyan's metro network equipment in 2H14 once its long-haul network buildout was finished.
- Cyan's Q2 report arrives on Aug. 11.
Jul. 23, 2014, 1:45 PM
- Juniper's (JNPR -9.8%) soft Q3 guidance, along with its related commentary on U.S. telco demand, is taking a toll on fellow telecom equipment suppliers Cisco (CSCO -1.2%), Ciena (CIEN -3.2%), Cyan (CYNI -2.5%), Zhone (ZHNE -6.5%) Ruckus (RKUS -1.6%), and Sonus (SONS -3.8%).
- Optical component vendors JDS Uniphase (JDSU -2.9%) and Finisar (FNSR -2%) are also off, as are several chipmakers (previous) with heavy networking/telecom exposure.
- On its CC (transcript), Juniper stated "market dynamics including M&A activity" are affecting the "sequencing and timing" of U.S. carrier projects. Jefferies reported in June AT&T has significantly cut its wireline capex in the wake of the DirecTV deal.
- There has been speculation AT&T is keeping a lid on wireline capex ahead of the full rollout of its ambitious Domain 2.0 initiative, which will feature the launch of software-defined networking (SDN) and network functions virtualization (NFV) platforms.
- Juniper insists it remains well-positioned with the aforementioned U.S. carriers, and that it has "major design wins" for next-gen projects. The company adds demand remains healthy with U.S. federal, cable, and Internet clients.
- The company's router revenue rose 7% Y/Y in Q2 to $617.8M, and its switch revenue rose 25% to $199.8M. Security product revenue fell 8% to $111.6M. The Junos Pulse VPN software ops (about to be sold for $250M) contributed $31.4M in revenue ($15.9M product, $15.5M service).
Jun. 5, 2014, 12:49 PM
Jun. 5, 2014, 9:12 AM
Jun. 5, 2014, 7:42 AM
- In addition to beating on revenues and EPS, Ciena's margins - adjusted gross of 43.1% and adjusted operating of 6.2% - are also ahead of estimates.
- Q3 revenue guidance of $585M-$615M is better than consensus of $583.3M, with adjusted gross margin expected in the low-mid 40s range.
- CC at 8:30 ET
- CIEN +12.9% premarket
- Previously: Ciena beats by $0.04, beats on revenue
Jun. 2, 2014, 4:43 PM
- Jefferies reports AT&T (T -0.1%) significantly cut its wireline capex starting last month.
- It thinks many companies could be affected, including equipment vendors Alcatel-Lucent (ALU -2.2%), Ciena (CIEN -3.9%), Juniper (JNPR +0.2%), and Adtran (ADTN -5.1%), and component vendors JDS Uniphase (JDSU -2%) and Finisar (FNSR -0.7%).
- As its is, AT&T's 2014 capex budget ($21B) is down $200M from 2013's spending level. Moreover, the carrier's huge mobile infrastructure needs and the DirecTV deal could be motivating it to cut wireline spend.
- Also: AT&T may be looking to keep capex down ahead of the full rollout of Domain 2.0, an initiative meant to improve network flexibility, lower costs, and cut provisioning times through the embrace of software-defined networking (SDN) and network functions virtualization (NFV).
- MKM has argued Domain 2.0 will be a negative for Cisco, but a positive for Ciena and Finisar, among others.
Apr. 24, 2014, 12:26 PM
- In addition to beating Q1 estimates, Infinera (INFN +5.9%) guided on its CC (transcript) for Q2 revenue of $160M-$170M and EPS of $0.02-$0.06 vs. a consensus of $156.3M and $0.05. As is its custom, rival Ciena (CIEN +5.8%) is following Infinera higher.
- Thanks to a favorable mix, Q1 gross margin was 41.8%, +40 bps Q/Q and +590 bps Y/Y, and above guidance of 40%. Infinera only forecasts a GM of 39%-41% for Q2 due to the margin pressure caused by new large-footprint deployments, but still expects a low-40s GM for the full year and future margin gains as it fulfills capacity expansion orders for major deployments.
- Strong North American demand allowed revenue to grow 3% Q/Q in seasonally weak Q1. Infinera had two 10%+ customers - a cable MSO and a tier-1 North American carrier, and added one more client for its dense/high-capacity DTN-X optical transmission platform, raising the total to 42.
- Not surprisingly, a positive outlook was provided for the 100G optical market, where the company and Ciena have leading positions. Infinera says it's confident it can outgrow the broader 100G market in 2014.
Apr. 4, 2014, 1:54 PM
- Ciena (CIEN -8%) guided during its investor day for its FY14 (ends Oct. '14) op. margin to be at the low end of the company's 7%-10% target range.
- Citi (Neutral) thinks the forecast suggests ~10% op. margins are still a ways off. "While we have become believers in the sustainability of Ciena’s product cycle, op margin expansion seems to still be coming in fits and starts challenging the earnings power of the company and making it difficult to currently argue for more than a 20x P/E on our CY14 $1.24 est."
- William Blair (Outperform) notes the forecast implies a fiscal 1H op. margin of 5%, but also a fiscal 2H margin near 10%. The firm is slightly upping its FY14 and FY15 EPS estimates.
- Ciena also guided for FY14 opex to total $820M, up just slightly from an FY13 level of $810M (exc. restructuring/amortization costs). Revenue growth is expected to exceed mid-to-high single digit market growth; Ciena's rev. growth consensus already stands at 10.4%.
- Ciena's investor day slides
Mar. 28, 2014, 9:50 AM
- InvenSense (INVN +3%) has been upgraded to Buy by Roth.
- Ciena (CIEN -1.4%) and JDS Uniphase (JDSU -0.4%) have been cut to Sector Perform by RBC. MKM upgraded JDS a week ago.
- Veeco (VECO +4.6%) has been upgraded to Buy by CLSA. UBS upgraded shares earlier in March.
- Avago (AVGO +1.9%) has been started at Outperform by Pac Crest.
- Telecom Italia (TI +2.2%) has been upgraded to Buy by Berenberg.
- Integrated Silicon (ISSI +3.4%) has been started at Buy by B. Riley.
Mar. 26, 2014, 11:00 AM| Mar. 26, 2014, 11:00 AM
Mar. 26, 2014, 9:32 AM
- Cyan (CYNI) CFO Mike Zellner has resigned for personal reasons, effective immediately. Jeff Ross, who in the past has been the CFO of mobile ad firm Velti (filed for bankruptcy last year) and SAP-acquired Sybase, is replacing him.
- Cyan also says its Q1 revenue will be "at or above the high end" of a $16M-$18M guidance range; the consensus is currently at $16.9M.
- The CFO change and positive Q1 pre-announcement follows multiple earnings disappointments.
- Shares are halted.
Mar. 20, 2014, 10:48 AM
- Stifel's Sanjiv Wadhwani has upgraded Infinera (INFN +5.5%) to Buy. Following meetings at last week's OFC 2014 optical networking industry conference, Wadhwani believes demand for 100G systems "is now on a much more global scale versus a year ago," with activity having picked up in Europe and parts of Asia.
- Ciena (CIEN +3.8%), also a major player in the 100G optical transport space, is following Infinera higher. Both companies (as well as several peers) rallied last week after Goldman upgraded Infinera and Calix, while estimating 100G systems have a 15% gross margin edge relative to 10G systems.
- Component makers Finisar (FNSR +2.3%), Oclaro (OCLR +2.6%), and Alliance Fiber (AFOP +3.8%), each of which also have 100G exposure, are rallying as well.
Mar. 12, 2014, 6:38 PM
- Goldman's upgrades of Infinera (INFN +14.9%) and Calix (CALX +2.8%) wound up sparking a broader rally telecom equipment and optical component makers. Notable gainers: FNSR +6.2%. UBNT +6.7%. CYNI +5.1%. CIEN +3.8%. JDSU +5.4%. AFOP +3.4%. NPTN +3.4%. ADTN +2.8%. FN +2.2%.
- Goldman's Simona Jankowski believes Infinera, which recently lost a major Verizon deal to Alcatel-Lucent, has regained Level 3 as a client. She also estimates 100G optical system shipments "have approximately a 15% point gross margin advantage" relative to 10G counterparts, and sees this delta boosting Infinera's margins as 100G "increases from mid-50% of total product revenue in 2013 to mid-70% in 2014."
- Regarding Calix, Jankowski reports seeing better spending trends among the tier 2/3 carriers the company leans heavily on, and thinks 2014/2015 estimates now "more accurately reflect" Calix's growth trajectory.
- Today's gains come as the optical networking industry's OFC 2014 conference continues. As usual, the conference has seen a slew of product launches. Ciena has followed Infinera (previous) in launching software tools for intelligently controlling a network's optical layers, and JDS Uniphase is showing off several new components and modules.
Mar. 6, 2014, 10:57 AM
- Cyan (CYNI +14.5%) sales SVP James A. Hamilton discloses he bought 100K shares on Monday at $3.35.
- The purchase came with Cyan shares close to their post-IPO low of $3.19. They cratered in both October and January following bad earnings news. Soft orders from top customer Windstream were a culprit each time.
Mar. 6, 2014, 10:49 AM
- Though Ciena's (CIEN +2.1%) FQ1 revenue was only in-line, its gross margin (43.4%, +260 bps Q/Q and -120 bps Y/Y) and opex ($199.8M, -5% Q/Q and +13% Y/Y) were favorable to guidance for a low-40s GM and $205M in opex. That, in turn, helped EPS beat by $0.07.
- Ciena expects FQ2 revenue of $540M-$570M, in-line with a $561.1M consensus. GM is again expected to be in the low-40s range, and opex is expected to rise to $210M.
- Sales of integrated Ethernet switching/optical networking gear rose 39% Y/Y in FQ1 to $333.4M (62.5% of revenue). Software/services sales -1% to $108.5M; Ethernet switching +13% to $51.7M; optical transport -30% to $40.1M.
- Optical networking rival Infinera (INFN +4.5%) is also higher. The company recently launched a solution it claims can automate/control both the digital switching and optical transport layers of an optical network. The solution, part of a broader trend towards building networks that offer more optical layer intelligence and flexibility, is expected to ship in September.
- Ciena's FQ1 results, PR
Feb. 18, 2014, 1:59 PM
- Ciena (CIEN +4.7%) is now up 13% since announcing a major reseller deal/product partnership with mobile infrastructure leader Ericsson on Friday morning. PT hikes from Nomura, Evercore, and MKM are contributing to today's gains.
- Nomura's Stuary Jeffrey has upped his Ciena FY16 (ends Oct. '16) EPS forecast to $2.33 from $1.92, and predicts the Ericsson deal will lift Ciena's EMEA/Asia-Pac share by 2%. He expects the gross margin for Ericsson-related revenue to be 500 bps lower than for other sales, but (given Ericsson is handling much of the sales burden) also thinks the opex-to-sales ratio will be half that for other business.
- Citi's Ehud Gelblum sees the deal improving Ciena's reach in emerging markets and Asia-Pac, where its presence has historically been limited. He also expects Ericsson to boost sales of Ciena's carrier Ethernet gear for wireless backhaul deployments.
Ciena Corp. engages in the provision of network and communication infrastructure. It operates through the following segments: Converged Packet Optical, Packet Networking, Optical Transport and Software and Services. The Converged Packet Optical segment develops and sells optical processors,... More
Industry: Communication Equipment
Country: United States
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