As Ciena Closes FY2010, the Integration Keeps Chugging Along

Telecommunications equipment maker Ciena (NASDAQ:CIEN, news, filings) reported fiscal Q4 and 2010 earnings this morning, bringing what they correctly call transformative year to an end.  Revenue of $417.6M were up 7% from the prior quarter and were solidly above expectations for the period ending on Oct 31.  Of that, some $255.6M came from the Nortel MEN assets, meaning that the original Ciena business managed $161M or so, down sequentially from $168M in the prior quarter.  In other words, the Nortel assets outperformed, while Ciena’s original business lagged somewhat.  However, from here on out it’s the aggregate number that will matter.

Adjusted loss per share of $0.18 was slightly below expectations, while adjusted gross margins fell slightly to 43.7% – still within the range of guidance of the low 40s.  As for the integration, things still seem to be on track – though the proof will be in 2011’s pudding.  Spending on integration activities amounted to $18.1M during the quarter and restructuring added another $4.5M, so there is clearly still substantial work going on.  Perhaps they will offer some more granularity on those activities during the CC later this morning.

Regarding next quarter, Ciena projected revenues in the range $410-430M, the midpoint of which seems to be slightly above the street’s average guesses.  Adjusted gross margins are expected to be in the low 40s, as compared with 43.7% this quarter.  All in all, not much to worry about here.

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Categories: Financials · Telecom Equipment