Ciena's Q1 losses widen to $18.8M on customer order timing

Ciena reported that its loss widened to $18.8 million, or 17 cents a share, up from $15.9 million, or 15 cents a share, in the same period a year ago due to the timing of government customers' orders.

Overall fiscal first quarter 2015 revenues were $529.2 million, down from $533.7 million for the fiscal first quarter 2014. Taking out special items, per-share earnings fell to 12 cents from 13 cents in first-quarter fiscal year 2014.

Analysts polled by Thomson Reuters forecast earnings of three cents a share.  

"Revenue in the quarter was lower than expected due to a significant strengthening of the U.S. dollar as well as the timing of the orders from the U.S. government sector that we expected to turn to revenue in the quarter," said Gary Smith, CEO of Ciena during the earnings call, according to a Seeking Alpha transcript. "We now expect to receive these orders in the current quarter with revenue recognized over Q2 and Q3."

Converged packet optical continued to be a key revenue source for Ciena, improving slightly to $336.6 million from $333.4 million in the same period a year ago. Software and services revenue grew 6.3 percent to $115.3 million, while optical transport revenue fell to $22.3 million from $40.1 million a year earlier.

Despite the near-term losses, the service provider said it is continuing to see momentum in the metro optical market as it wins new accounts like Windstream, which chose Ciena for part of its next-gen metro network strategy.

"In addition to our progress with web-scale buyers, in Q1 we also further strengthened our leadership position with service providers especially in the critical metro segment of this market," Smith said. "With full year 2014 figures just coming out, research firm [DellO'ro] show Ciena gaining 3 percentage points of metro share worldwide."

In addition to the carrier metro market, Ciena said it's seeing success outside of the telecom industry.

"Our continued success in new verticals contributed to non-telco customers making up more than a third of our Q1 revenue and that's compared to just 25% a couple of years ago," Smith said.

Looking toward the second quarter, Ciena has forecast revenue to be in the range of $585 million to $615 million.

Shares of Ciena were trading at $20.90, up 26 cents or 1.26 percent, Friday morning on the New York Stock Exchange.  

For more:
- see the earnings release
- Dow Jones has this article
- see this Seeking Alpha earnings transcript (reg. req.)

Special report: Wireline telecom earnings in the fourth quarter of 2014

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