Ciena's 09 results reflect challenging telecom market

Service providers' slow exit out of their current spending holding pattern is not helping telecom equipment vendor Ciena as its full year revenues declined 27.8 percent from $902.5 million to $652.6 million.

During the fiscal fourth quarter of 2009, Ciena, which is in the process of integrating Nortel's Metro Ethernet Network (MEN) unit into its own fold, reported revenue of $176.3 million, up 7 percent from Q3 revenue of $164.8 million. This figure beat analyst revenue expectations of $167.7 million.

Potential growth in 2010 for Ciena could come from its pending acquisition of Nortel's MEN unit, which it expects to close in March 2010. Although the MEN unit provided Nortel with $998 million in revenue for the first nine months of 2009, Ciena thinks it will cost them $180 million to integrate the unit into its business.

Ciena's CEO Gary Smith said that when you subtract the integration costs from the equation, the MEN unit will add more cash to its earnings coffers for fiscal 2010. Still, the integration costs will have a negative impact on Ciena's yearly financial outlook for 2010.

Regardless of the challenges it faces, Smith believes that it will be prepared to address the telecom market with new products as service providers expand capacity and providing more wireless backhaul wholesale services to mobile carriers.

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