Ciena's third-quarter sales dive to $50 million from $458 million

Firm loses 42 cents a share

postponed order noted

August 23, 2002|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

Ciena Corp., the Linthicum maker of fiber-optic equipment, reported yesterday sharp losses for the fiscal third quarter as revenue fell by hundreds of millions of dollars.

The company reported a net loss of $160 million, or 42 cents per share, for the quarter that ended July 31.

That compares with a net income of $5.7 million, or 2 cents per share, for the corresponding quarter of last year.

Revenue for the quarter dropped to $50 million from $458 million in the third quarter of last year.

"It's a bit of a mixed bag in that the top line was light, but they did a little bit better with cost controls," said Simon Leopold, a telecommunications equipment analyst for Merrill Lynch & Co. Inc. in New York.

Ciena said revenue suffered because of delays in an order for one of its customers, which was slated to have Ciena equipment deployed at the end of this month. Revenue associated with that deal, which is expected to happen in the next few weeks, was about $20 million, according to Ciena.

"We're disappointed with the quarter's revenue of $50 million," Gary B. Smith, Ciena's president and chief executive, said during a conference call.

Adjusted net loss - which does not include restructuring and other charges - was 16 cents per share. Analysts were expecting an adjusted net loss of 19 cents per share, according to a survey by Nelson Information.

The company's financial results for the quarter include Ciena's numbers combined with six weeks of those of ONI Systems Corp., a California telecommunications company that Ciena acquired in June in a stock and debt deal valued at about $743 million.

Smith said the company is winning new customers even as the telecom industry continues to struggle. Ciena has more than 80 customers, including five it gained during the third quarter.

Returning to profitability is a major goal for Ciena, Smith said.

"Clearly we're affected like all the other players in this telecom storm," Smith said during an interview. "I think that we've given guidance that we're cautiously optimistic that we're going to be up next quarter, which is clearly good news."

The adjusted net loss next quarter is expected to be between 17 cents and 19 cents per share, the company said.

Shares of Ciena fell 37 cents yesterday to close at $4.12.

Leopold, the Merrill Lynch analyst, said the outlook for Ciena appears challenging.

Rick Schafer, a research analyst for CIBC World Markets, predicts the company will be a long-term survivor, but it must continue to cut costs.

He is also concerned that $50 million in revenue for the quarter may not be the worst sales numbers Ciena sees.

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