Despite reporting a sharp increase in income for both the fiscal fourth quarter and the year, shares of Linthicum's Ciena Corp. sank 12 percent yesterday after the fiber-optics maker missed analysts' expectations and provided a lower estimate for 2008 earnings than Wall Street was anticipating.
Profit for the quarter ending Oct. 31 was $30.4 million, or 30 cents per share, more than double the $13 million (14 cents per share) for the comparable quarter last year.
Annual income was $82.8 million, or 87 cents per share, compared with a fiscal 2006 profit of about $600,000, or 1 cent per share.
The numbers were lower than estimates of 33 cents per share for the quarter and 99 cents per share for the year, according to analysts polled by Bloomberg News.
Revenue for the quarter was $216 million, up 35 percent from last year's $160 million. Revenue for the year was $780 million, up about 38 percent from $564 million in 2006. The increase was fueled by customers such as AT&T Inc. who are using Ciena products to boost their bandwidth capabilities.
"We came a long way in 2007," chief executive Gary B. Smith said during a conference call to discuss the results. "Hopefully you can tell we feel good about 2008."
He predicted revenue growth of about 20 percent next year, below the 22 percent financial analysts expected. One analyst asked Smith if the guidance for next year was designed to temper Wall Street's expectations.
"Is there an opportunity to do more than that? Absolutely," Smith said, but he also said there was "risk associated with achieving 20 percent."
The company also said it lost money during the quarter through its investments in two structured investment vehicles or SIVs. Some of those investments relied on mortgage-backed securities that have lost value as home loan defaults triggered a credit crisis.
Ciena lost $13 million investing in SIV Portfolio PLC (formerly known as Cheyne Finance PLC) and Rhinebridge LLC. Both funds entered receivership and failed to make maturity payments to investors.
Ciena also announced a new chief financial officer yesterday. James E. Moylan Jr., formerly an executive at wholesale insurance broker Swett & Crawford Group Inc., will succeed Joseph R. Chinnici by next month. In April, Chinnici announced plans to step down at the end of the year.
Ciena shares fell $5.08 to close at $37.04 on the Nasdaq.