Ciena closer to posting a profit

Company reports that it narrowed its loss for the quarter

June 02, 2006|By STACEY HIRSH | STACEY HIRSH,SUN REPORTER

Linthicum-based Ciena Corp. released quarterly earnings yesterday that brought the telecommunications equipment maker close to profitability - something it hasn't achieved in nearly five years.

Ciena reported a net loss of $1.9 million, or zero cents per share. Ciena has not had a profitable year since 2000, and its last profitable quarter ended July 31, 2001.

When the second-quarter numbers were adjusted to exclude stock compensation, restructuring costs and other charges, Ciena's earnings hit $3.6 million, or a penny a share.

"We've invested significantly at a downturn in the market, and this strategy was not without its risks. But we think the pieces are beginning to come together now for the strategy, and our improved financial performance is a testament to that," Ciena Chief Executive Officer and President Gary B. Smith said in a telephone interview after the earnings were released yesterday.

Ciena's revenue was $131.2 million for the second quarter ending April 30. The company reported a net loss of $74.8 million, or 13 cents per share, on revenue of $103.9 million for the corresponding quarter last year.

The company said during a conference call with analysts yesterday that it expects adjusted third-quarter earnings to be between break-even and a penny per share.

Ciena officials have not said when they expect the company to be profitable based on generally accepted accounting principles, which are required by government regulators, "but we'll absolutely get there," Smith said.

Ciena's strategy has been to grow its product line through acquisitions. During the past five years, Ciena acquired a half-dozen telecommunications companies in deals valued at more than $2.1 billion.

But the company said it also is benefiting from the convergence of voice, data and Internet service.

With services such as digital subscriber lines and on-demand video becoming more prevalent in homes, carriers are upgrading their networks to meet customer demands - and Ciena sells products to help them do that.

"That is a solid tail wind for the company in terms of a global trend," said Tim Daubenspeck, a senior networking equipment analyst for Portland, Ore.-based investment bank Pacific Crest Securities.

Daubenspeck does not own shares of Ciena.stacey.hirsh@baltsun.com

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