Ciena's first-quarter loss widens to 25 cents a share

CEO reports progress `toward profitability'

February 21, 2003|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

Ciena Corp., the Linthicum maker of fiber-optic equipment that soared during the tech boom and now is fighting to regain profitability, reported yesterday that its loss widened and revenue fell in the first quarter.

Ciena lost $107.1 million, or 25 cents per share, on revenue of $70.5 million in the three months that ended Jan. 31. That compares with a loss of $70.6 million, or 22 cents per share, on revenue of $162.2 million reported for the corresponding period a year earlier.

Adjusted net loss, which excludes one-time charges, was $48.8 million, or 11 cents per share, in the first quarter. That compares with an adjusted net loss of $56.7 million, or 17 cents per share, posted for the year-earlier quarter.

The numbers exceeded analysts' expectations of an adjusted net loss of 14 cents a share, according to Zacks Investment Research.

Ciena topped its own revenue estimates. The company had predicted that first-quarter revenue would be up as much as 10 percent from the fourth quarter of last year, which would have put sales at a maximum of $68.1 million. Revenue in the second quarter is expected to be the same or slightly higher than it was this quarter, the company said.

"We continue to make solid progress toward profitability," Gary Smith, Ciena's president and chief executive officer, said in a statement.

Ciena's struggles stem from a severe downtown that continues to grip the telecommunications industry. Several carriers have had to slash spending, and many companies have cut jobs. Ciena has had several rounds of layoffs. Most recently, it cut 450 jobs in September, leaving the company only a little more than half the size it was a year before that date.

Simon Leopold, a telecommunications equipment analyst and a vice president for Merrill Lynch & Co. Inc. in New York, said Ciena is still far from its goal of getting back into the black. Ciena stock, he said, appears very expensive to his firm, which has a sell rating on the stock.

"We have a saying: good company, bad stock," Leopold said.

Leopold said he believes that Ciena has a good management team, a good product portfolio, a good balance sheet, but its stock price - even though a fraction of its trading levels during the telecom boom - is still too high.

Ciena shares closed yesterday at $5.41, off 11 cents but more than twice their 52-week low of $2.41.

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