Ciena Turns That Frown Upside Down

May 31st, 2012 by · 1 Comment

With the drumbeat of doom coming out of Europe lately, we could use a bit of good news from the equipment sector.  Despite a light fiscal Q1, Ciena (NASDAQ:CIEN, news, filings) came through this morning with a very nice quarter, announcing their unaudited fiscal Q2 numbers (through 4/30).  Yep, they crushed both revenue and EPS estimates for once.  Here are the numbers in some context:

$ in millions FQ2/11 FQ3/11 FQ4/12 FQ1/12 FQ2/12 FQ3/12(guidance)
-Packet-Optical Transport 272.6 266.5 296.2 266.3 318.0
-Packet-Optical Switching 31.3 40.7 41.2 43.4 31.0
-Carrier Ethernet Solutions 30.9 40.5 28.8 21.9 30.6
-Software and Services 81.3 87.6 89.3 85.1 98.0
Revenue 417.9 435.3  455.5 416.7 477.6   455-485
Adj. OPEX 186.0 175.2 180.8 175.4 172.9  low-mid 180s
Adj. GM% 41.3% 44.1% 43.2% 41.9% 39.6%  ~40%
Adj. EPS  -0.24 0.08 -0.14 -0.17  0.04

Revenues: Guidance had been for $435-460 while analyst had settled down just below the midpoint of that range.  They obviously had a big packet-optical transport quarter as well as extra success in software and services.  Looking forward, their guidance of $455-485 for fiscal Q3 straddles analyst expectations of $471.

Margins & Earnings:  Adjusted non-GAAP gross margins fell just below 40% this quarter, while they continued to guide to the same level for Q3.  Meanwhile, the extra revenues helped boost adjusted earnings per share into positive territory to $0.04, while the street had been looking for them to lose that much.

This seems to put them in a good position for the second half, and perhaps puts to rest a few worries - the stock had been off 25% over the last month or so.

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Categories: Financials · Telecom Equipment

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