Ciena's shares slide on lower 2Q revenue forecast

March 07, 2011|By Gus G. Sentementes, The Baltimore Sun

Shares of Ciena Corp., a Linthicum-based maker of telecommunications networking equipment, slid 10 percent Monday after the company posted a fiscal first-quarter loss and predicted that revenues in the second quarter would be lower than expected.

The company's net loss widened to $79 million this past quarter compared with $53 million a year ago, largely because of integration costs tied to its purchase last year of Nortel's Metro Ethernet Networks division for $769 million. Ciena said it tallied more than $24 million in merger costs in the first quarter.

However, the company said that revenues climbed 4 percent, to $433 million, in the quarter that ended Jan. 31, compared with $417.6 million in the corresponding period last year.

With the purchase of the Nortel division, Ciena roughly doubled in size and became a major competitor in the world of telecommunications networking equipment.

Ciena's performance in the first quarter was in line with Wall Street analysts' estimates. But the company released fiscal second-quarter guidance Monday below analysts' expectations.

Ciena forecast that its second-quarter revenue would be in the range of $415 million to $435 million.

A consensus estimate provided by Bloomberg News showed that 18 analysts polled expected revenue to be more than $437 million.

Michael Genovese, an analyst with MKM Partners in New York who follows Ciena, said the company's performance for the first half of this year is solid. He said the company is poised for a "big ramp-up" in revenue at the end of the year as it begins a new product cycle for major customers, such as Verizon and AT&T.

"It's just a little quarter-to-quarter lumpiness," Genovese said. "I think the company's really well-positioned."

Ciena's shares closed Monday at $25.98 — down $2.83, or about 10 percent.

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