Ciena Q3 Profit Tops View, Names François Locoh-Donou As COO

(RTTNews) - Network specialist Ciena Corp. (CIEN) reported Thursday that profit for the third quarter grew 46 percent from last year, despite a revenue drop, reflecting improved operating margins.

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

"We delivered strong financial performance in our fiscal third quarter, including increased profitability and cash generation, demonstrating our ability to deliver on our business model and drive continued operating leverage," President and CEO Gary Smith said.

The Hanover, Maryland-based telecommunications networking equipment maker reported net income of $23.63 million or $0.19 per share for the third quarter, higher than $16.16 million or $0.15 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $50.73 million or $0.37 per share, compared to $40.90 million or $0.32 per share in the year-ago quarter.

On average, 19 analysts polled by Thomson Reuters expected the company to report earnings of $0.34 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter edged down to $602.93 million from $603.56 million in the same quarter last year, and missed eighteen Wall Street analysts' consensus estimate of $629.87 million.

Converged packet optical revenues grew to $408.0 million from $382.0 million, while packet networking revenues declined to $57.2 million from $69.5 million a year ago.

Optical transport revenues nearly halved to $17.5 million from $31.0 million, and software services revenue edged down to $120.2 million from $121.1 million last year.

The company noted that U.S. customers contributed 59.8 percent of the revenues, and one 10 percent-plus customer represented a total of 20 percent of total quarterly revenue.

Operating margin for the quarter improved 130 basis points to 7.4 percent from a year ago as gross margin expanded 110 basis points to 44.8 percent from last year.

Looking ahead to the fourth quarter, Ciena expects revenues in a range of $665 million to $700 million, including a full quarter of results from the acquired Cyan business. Analysts expect the company to report revenues of $662.76 million for the quarter.

"Despite short-term revenue headwinds related to the timing of network implementations at certain large service provider customers, fundamental demand drivers for our business remain strong. In fact, we now expect to exceed 10% adjusted operating margin for the full fiscal year," Smith added.

Separately, Ciena also announced that François Locoh-Donou has been appointed senior vice president and chief operating officer, effective November 1, 2015. He will report directly to Smith.

In the new position, Locoh-Donou will be responsible for Ciena's global field organization, including the global sales and services functions, while retaining his existing responsibility for research and development, product line management, supply chain and quality functions.

Locoh-Donou joined Ciena in 2002 and has served as senior vice president of global products group since August 2011.

In Thursday's regular trading session, CIEN is currently trading at $21.41, down $1.08 or 4.80% on a volume of 2.54 million shares.