Predictions for earnings per share for telecom vendors is always a bit of hit or miss, just because of the stochastic nature of the type of sales they make and the currency fluctuations where they make them. Ciena finished out its fiscal 2014 today, reporting a surprise loss for the October quarter but apparently the market is happy enough there wasn’t worse news given other data lately. Here’s a quick table of the numbers in some context:
|$ in millions||FQ3/13||FQ4/13||FQ1/14||FQ2/14||FQ3/14||FQ4/14||FQ1/15
|-Software and Services||108.6||118.7||108.5||107.1||121.1||124.8|
|Adj. GM%||43.6%||40.8||43.4%||41.3%||44.3%||37.9%||low 40%s|
Although there is much talk about the effect of concessions for the AT&T supplier contract on revenue growth, revenues were actually in the middle of guidance. The adjusted loss per share of $0.08 appears to come down to a combination of currency fluctuations (especially in Latin America) and gross margins coming in at the bottom of guidance. Ciena says this should return to normal next year.
Revenue guidance for next quarter straddled the composite forecast of analysts, but on average was a bit lower than that. But all in all, the market seems happy in early trading as the stock is up 6% at the moment. Overall, Ciena has had a very good year, finally posting the sort of numbers they had the potential for since the Nortel MEN deal years ago. Demand for 100G has helped fuel that, and Ciena is working hard to position itself for the shifts driven by the arrival of SDN and NFV.
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