Ciena Q1 Loss Widens, But Adj. Profit Tops View

(RTTNews) - Network specialist Ciena Corp. (CIEN) reported Thursday a loss for the first quarter that widened from last year, despite improved gross margins, reflecting higher operating expenses and a revenue decline.

Adjusted earnings per share topped analysts' expectations, while quarterly revenues missed their estimates. The company also provided revenue guidance for the second quarter, in line with Street view.

"Our first quarter performance is highlighted by continued customer diversification, an expanding portfolio, and strong profitability. While order timing and foreign exchange headwinds impacted revenue in the quarter, we delivered improved gross margin and excellent operating profit," President and CEO Gary Smith said.

The Hanover, Maryland-based telecommunications networking equipment maker reported a net loss of $18.78 million or $0.17 per share for the first quarter, wider than $15.94 million or $0.15 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $13.64 million, or $0.12 per share, compared to $13.68 million or $0.13 per share in the year-ago quarter.

On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $0.03 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter edged down 0.8 percent to $529.16 million from $533.70 million in the same quarter last year, and missed twenty Wall Street analysts' consensus estimate of $558.78 million.

Converged packet optical revenues edged up to $336.6 million from $333.4 million, packet networking revenues grew to $55.0 million from $51.7 million a year ago.

Optical transport revenues nearly halved to $22.3 million from $40.1 million, while software services revenue increased to $115.3 million from $108.5 million last year.

The company noted that U.S. customers contributed 56.3 percent of the revenues, and one 10 percent-plus customer represented a total of 22 percent of total quarterly revenue.

Gross margin for the quarter improved 120 basis points to 43.5 percent from a year ago, and adjusted gross margin expanded 70 basis points to 44.1 percent from last year.

Looking ahead to the second quarter of fiscal 2015, Ciena expects revenues in a range of $585 million to $615 million and adjusted gross margin between 42 percent and 43 percent. Analysts expect the company to report revenues of $597.17 million for the quarter.

"We are consistently delivering on our business model and are well positioned to capitalize on our leadership in driving an open, global network for the cloud," Smith added.

CIEN closed Wednesday's regular trading session at $20.60, down $0.11 on a volume of 4.56 million shares. In the past 52-week period, the stock has been trading in a range of $13.77 to $27.16.