Ciena Misfires Again

Telecom equipment provider Ciena (CIEN) reported earnings today , and let’s just say things could be better.  We knew their fiscal Q4 would be ugly, back in September they guided toward revenue of $190-210M, down some 25% from Q3.  The actual number, $179.7M, was well below that range.  As one might expect with such a 29% sequential revenue decrease, earnings swung from income of $11.7M in the third quarter to a loss of $25.4M.  Guidance for fiscal Q1 of $170-185M was not particularly encouraging either.

But then we knew it was going to be ugly, so I doubt anyone is really surprised by this.  Previous guidance came before the extent of the current economic crisis was recognized. Ciena’s difficulties in a really tough economic climate show just how sensitive the telecom equipment space is to economic downturns.  When things are good, they can be truly amazing.  When things are bad, performance can be similarly amazing but in the other direction.  The shift between the former and the latter can be very quick.

The company said that they expect conditions to persist through 2009, and that they intend to aim for positive cashflow and earnings for the full year.  Mathematics of course would therefore require a swift and rather merciless cost cutting program in order to even try to meet that goal, so beware Linthicum, Maryland.  I wonder if their 100G R&D efforts will be affected.

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Categories: Financials · Telecom Equipment