With its fiscal Q2 results today Ciena (NASDAQ:CIEN, news, filings) finished off its first full year since its acquisition of Nortel's MEN division, which doubled the company's size and gave it a huge to-do list over the last year. The company says it has achieved all critical milestones now, including the transition to the Ciena back office systems. From here they hope to continue to optimize business operations and gain operating leverage, which sounds like a good idea.
Last quarter, Ciena easily beat estimates but that was partially due to integration work that moved recognition of some revenue ahead. This quarter Ciena was not so lucky, and revenues of $417.9M were on the low end of their range and below analyst estimates. Adjusted gross margins were 39.7%, just slightly below the low 40% range they guided to in March, and adjusted loss per share of $0.24 was also below analyst expectations. For fiscal Q3, Ciena offered revenue guidance of $435-455M and is expecting adjusted gross margins again in the low 40%s. All in all, I doubt analysts will be impressed this time around, although to be honest nobody has really known what to expect for four quarters now.
That will change though as the company switches from an integrate or die footing to an optimize and grow footing. It's time now to prove the purchase was worth all the trouble! I look forward to more information on revenue trends and momentum in the CC.
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