Ciena's CEO said that while it is well established with large telcos like Verizon and AT&T, the next opportunity for growth will be with cable MSOs deepening their fiber footprints in residential and business markets.
Gary Smith told investors during Ciena's fiscal second-quarter 2017 earnings call that it is finding opportunities with large cable MSOs to supply optical gear to satisfy their fiber expansions fueled by business Ethernet and gigabit broadband deployments.
“I think the big opportunity with the [cable] folks is really as they look to put fiber deeper into the network,” Smith said during the earnings call, according to a Seeking Alpha earnings transcript. “We’re already seeing activity in that space and we’re collaborating closely with most of the cable operators in North America.”
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Smith said that Ciena has continued to ramp its presence with all of the major North American cable operators over the past 18 months.
“Comcast is our largest [cable] customer and we’ve got pretty much all of our portfolio’s [platforms], including Ethernet business services, deployed with Comcast,” Smith said. “We’re seeing very good steady healthy growth there.”
Ciena saw varying results across its segments as more of its customer base transitions their optical networks to next-gen platforms and increases the focus on software-based solutions.
Here’s a breakdown of Ciena’s key metrics:
Converged Packet Optical: Converged packet optical continues to perform well, with $502.1 million in revenues, up from $435.2 million in the same period a year ago. During the second quarter, Ciena added six new customers to its 8,700 platform for a total of 49.
Software and Software-Related Services: Led by momentum in software subscription software and software-related services, revenue rose 24% year-over-year to $37 million. Specifically, software platforms and software-related services were $13.1 and $24.6 million, up year-over-year from $11.8 million and $18.7 million, respectively.
Packet Networking: Packet networking revenues were $66.4, down year-over-year from $68.5 million.
Optical Transport: Optical transport was the laggard in the mix as revenues dipped to $3 million.
Financials: Ciena reported total revenues for its fiscal second quarter $707 million, up 10% from a year earlier and at the high end of its guidance. Net profit more than doubled to $38 million or 25 cents a share from $14 million or 10 cents a share a year ago.
Looking towards its fiscal third quarter, Ciena expects revenue to be in the range of $710 to $740 million. As a result, for the full fiscal year the company now expects to achieve annual revenue growth in the range of 8% to 9%. In addition, Ciena expects to achieve the full fiscal year results that it indicated at the beginning of the year.