Ciena narrows Q2 losses, but misses revenue targets

Ciena (NASDAQ: CIEN) appears to be reaping the benefits of new service provider spending as the economic freeze starts to thaw out in Q2. And while Ciena's stock had been down due to challenging European market conditions, news that it's on track with the integration of Nortel's MEN unit helped boost company shares 7 percent.

"The stock had been down a bit recently on worries that they were going to say something like Europe was falling off a cliff, that the weakness was going to spread to North America and AT&T would cut capex," said Michael Genovese at Soleil Securities.

One area where Ciena could reap new revenue rewards from is wireless backhaul. After reducing capex spending last year due to the weak economy, Ciena's customers such as AT&T are starting to spend money on network equipment to backhaul the growth of wireless voice and data traffic.

Gary Smith, Ciena's CEO, while not revealing any specific wireless backhaul deal with AT&T yet, said the company was "incredibly well positioned."

Still, there were various hits and misses in Q2. Ciena reported revenue of $253.5 million, comprising $200 million of its own business and $53.5 million from the Nortel MEN assets, was an improvement over the $144.2 million it reported in Q2 09. However, the results fell short of analyst expectations of $268.3 million.  

Going forward into Q3, Ciena predicts it will report revenue between $375 million to $400 million in line with analyst average of $388 million.

For more:
- see the release here
- Reuters has this story

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