Ciena predicts revenue plunge

Nearly $50 million below what analysts expected this quarter

February 22, 2002|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

Ciena Corp. said yesterday that revenue for its second quarter is expected to fall nearly $50 million below analysts' expectations because of uncertainty in the market.

The Linthicum maker of fiber-optic equipment also reported yesterday that its losses widened in the first fiscal quarter and that revenue was less than half of what it was for the corresponding quarter in its last fiscal year. The quarter ended Jan. 31.

The news sent Ciena's shares tumbling $1.10 - or more than 12.6 percent - to close at $7.60, the lowest closing price since January 1999 and 91 percent lower than their 52-week high of $84.25.

Gary B. Smith, Ciena's president and chief executive, said the company believes two of its most important customers are going to buy "significantly less from us than they had previously indicated," contributing to second-quarter revenue estimates of about $100 million.

Analysts were predicting revenue for the second quarter of $148.5 million, according to Thomson Financial/First Call.

Rick Schafer, a research analyst with CIBC World Markets in Denver, lowered his second-quarter revenue forecast yesterday from $150 million to $90 million and said Ciena would have to reduce its expenses.

"It could mean headcount reductions, it could mean facility closures, it could mean a lot of things," Schafer said.

Smith said Ciena continues to monitor the market and manage its expenses prudently, but he declined to say whether that would mean more layoffs.

Ciena - which employs about 3,000 - laid off 380 in November and 400 this month.

Several telecommunications equipment companies have announced layoffs and other cutbacks in recent months as carriers reduce spending and the sector continues to slow.

Schafer, however, remained upbeat about the long-term prospects for the company.

"I clearly think Ciena's a long-term winner," he said. "I think that acquisitions demonstrate what you've seen in the past, which is the surviving companies, the strong companies, basically get stronger during these downturns."

Ciena said Monday that it planned to buy ONI Systems Corp. of California for $1.2 billion in stock and debt.

"Ciena's still very, very well-positioned with a very strong balance sheet and great customers," Smith said. "It's just we've got to get through this period."

Ciena reported a net loss of $70.6 million, or 22 cents per diluted share, for the first quarter, compared with earnings of $53.2 million, or 18 cents per diluted share, for the corresponding quarter last fiscal year.

Adjusted net loss - which does not include restructuring costs and other charges - was $56.7 million, or 17 cents per diluted share. That compares with adjusted earnings of $54.8 million, or 18 cents per diluted share, for the first quarter of its last fiscal year.

The company had revenue of $162.2 million for the quarter, compared with $352 million for the first quarter of its last fiscal year.

Revenue in the first quarter came from 40 customers, two of which contributed more than 10 percent of Ciena's revenue for the quarter. (One of the customers in that 10 percent category was a new one, Ciena said.)

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