Ciena's stock takes a hit from slower Q2 sales and a weak Q3 outlook

Ciena (Nasdaq: CIEN) may have narrowed its fiscal Q2 losses, but lower than expected quarterly revenues drove the vendor's shares down 13 percent.

During the quarter, revenues rose to $417.89 million from $253.47 million in Q2 2010. However, these results fell short of analysts' expectations of $428.1 million.

At the same time Ciena managed to narrow losses from $90 million or $0.97 per share in Q2 2010 to $62.69 million or $0.66 per share for the first quarter.

Gary Smith, President and CEO of Ciena, not surprisingly kept an upbeat tone in announcing the quarterly earnings. "Momentum continues to be strong across our business, as evidenced by high levels of customer engagement, additional design wins around the world and strong order flows," he said.

Ciena's revenue mix consisted of 45 percent in international carrier customers, while two 10 percent-plus customers made up 26 percent of the revenue. Quarterly gross margin contracted 130 basis points to 39.7 percent from fiscal Q2 2010, while adjusted gross margin declined 770 basis points to 41 percent.

A major concern amongst investors was Ciena's Q3 outlook. The vendor forecast Q3 sales of $435 to $455 million, a figure that's lower than the $456.1 million figure analysts polled by Thomson Reuters I/B/E/S forecast.

Despite the disappointing results, Ciena did complete the transfer of Nortel's Metro Ethernet Networks (MEN) business into its own back office systems.

For more:
- see the earnings release
- Reuters has this article

Related articles:
Ciena's fiscal Q1 sales up amidst losses and weak Q2 outlook
Internet2, LambdaRail want to expand their community presence
Ciena's Canada subsidiary gets $25 million grant from Ontario, Canada

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