A report of robust quarterly earnings and an optimistic forecast by telecommunications equipment-maker Ciena Corp. was credited yesterday with sparking a rally in the Nasdaq stock market.
Good news for the company yesterday was also considered good news for the state, because Ciena is hiring about 35 people a week and expects to add 1,800 workers to its current 3,200, more than half of them in Maryland.
Shares of Ciena, the No. 2 manufacturer of fiber-optic equipment in the United States, rose $12.19, or 15.87 percent, to close at $89. The Nasdaq rose 61.51 to 2,552.91.
"Ciena was the one that triggered the tech rally," said Alfred F. Kugel, senior investment strategist at Stein Roe & Farnham.
Analysts and investors reacted positively to Ciena's report for its first fiscal quarter, which ended Jan. 31. The Linthicum company reported revenue of $352 million, more than 130 percent higher than the $152 million it posted in the corresponding quarter a year earlier and 22 percent more than the previous quarter.
Analysts had forecast sales of $315.4 million in the first quarter, according to First Call/Thomson Financial.
Adjusted net income for the first quarter was $54 million, or 18 cents a share, better than the 15 cents per diluted share that analysts anticipated in a poll by First Call. It was also six times greater than the $9.1 million, or 3 cents a share, the company posted for the first quarter a year ago.
Company officials said they expected Ciena to benefit as telecommunications carriers, which are experiencing a downturn, opted for what they characterized as "next-generation equipment."
"We expect our business will continue to grow faster than the overall market, provided we execute successfully," said Patrick H. Nettles, Ciena's chairman and chief executive officer.
The company expects its revenue to grow 95 percent to 105 percent this year, higher than the 75 percent to 85 percent growth it initially forecast.
Ciena's report was credited with helping lift stocks throughout the telecommunications sector, including Corvis Corp., of Columbia and XO Communications Inc., of Reston, Va. Other beneficiaries were Sycamore Networks Inc., JDS Uniphase Corp., Sorrento Networks Corp. and Harmonic Inc.
In a conference call with analysts yesterday morning, Ciena executives credited their concentration on cutting-edge technology.
For example, creating a cross-country link on its new equipment can be a matter of "point and click," compared with switching a connection on the older "legacy" equipment, a process that could take months, said Gary B. Smith, Ciena's president and chief operating officer.
"We've been evangelizing this shift from spending on old `legacy' networks to the new generation," Smith said.
Analysts said they were impressed with Ciena's continued growth in its customer base to 43 clients.
Thirty of Ciena's customers produced revenue for it during the most recent quarter. The company added three customers last quarter, including MetroRED, a Brazilian telecommunications company that the company said helped broaden its reach into Latin America.
Ciena generates about half its sales from business outside the United States.
Ciena also announced shipments of its new MultiWave CoreDirector optical-switching equipment to Level 3 Communications Inc., a Colorado company that is constructing more than 20,000 miles of fiber-optic networks in the United States and Europe.
Ciena's CoreDirector switches, a new product which routes phone and data traffic through fiber-optic networks, contributed more than 10 percent of sales in the first quarter.
Some of the same concerns that dragged down Ciena's stock by 25 percent in December when it announced its $2 billion purchase of Cyras Systems Inc., a manufacturer of optical switching systems, persisted yesterday.
Brean Murray Research maintained its "hold" recommendation for the company stock because it remains concerned about the Cyras acquisition, which won't produce a product for Ciena until at least next summer, said analyst Gina H. Sockolow. She and others, though, said they were pleased with the company's overall performance.
"They have the full end-to-end - long haul, metro, regional and local access [in fiber-optic networks]," said Prospero Roda, who tracks the company for Global Capital Securities in Baltimore.
Ciena helped pioneer a method to markedly increase the amount of data that a single fiber-optic strand can carry. Known as dense-wavelength division multiplexing, the technology separates light into different colors, or wavelengths.
"When you look at the emerging photonics industry here, you start with Ciena," said David S. Iannucci, secretary of the state Department of Business and Economic Development, adding that 30 companies in the fiber-otpics field now employ 4,500 people in Maryland.
"Ciena is, in fact, the cornerstone for the area becoming the capital for the photonics in the United States. Ciena is the beginning."
Reuters news service contributed to this article.
