) reported first-quarter 2013 non-GAAP earnings per share of 12
cents per share, much better than the previous-year loss per
share of 17 cents. Including share-based compensation, earnings
came in at 4 cents, outpacing the Zacks Consensus Estimate of a
loss of 25 cents per share. The year-over-year improvement was on
the back of higher revenues and lower-than-expected operating
Revenues for the quarter increased 8.7% year over year to
$453.1 million and was within management's guided range of $435
million and $460 million. Moreover, reported revenues also
surpassed the Zacks Consensus Estimate of $450 million. However,
sequentially, revenues were down a modest 2.7%.
Product revenues, which accounted for 78.0% of the total
revenue, increased 5.8% from the year-ago quarter to $353.1
million. Services revenue, which contributed 22.0% to the total
revenue, jumped 20.5% year over year to $100 million.
Ciena reported adjusted non-GAAP gross profit of $202.2
million, which increased 15.9% from the year-ago quarter. Gross
margins expanded 270 basis points on a year-over-year basis to
44.6% due to favorable product mix. Including share based
compensation, gross profit came in at $201.2 million while
margins came in at 44.4%.
Operating expenses on a non-GAAP basis increased marginally,
up 0.7% year over year, to $176.6 million. Including share-based
compensation; operating expenses came in at $183.9 million.
Lower-than-expected operating expenses led to Ciena's
improvement in operating results. Ciena reported non-GAAP
operating profit of $25.6 million, which was up from an operating
loss of $0.9 million in the year-ago quarter.
Net Income on non-GAAP basis increased from a loss of $16.5
million reported in the previous year quarter to a profit of
$12.3 million. Including share-based compensation, net income
came in at $4.3 million.
Ciena exited the quarter with $552.2 million in cash and cash
equivalents versus $642.4 million in the previous quarter. During
the quarter, company had used $45.7 million in operating
Ciena expects second quarter 2013 revenue to range between
$465 million and $495 million. Adjusted gross margin (excluding
one-time operating items) is projected to be at the lower range
of 40%, while adjusted operating expenses is expected to be
around $190 million.
Ciena posted a surprise profit after five quarters and had
provided positive top-line guidance. Moreover, the company's
Tier-1 contract wins and strong order inflow is expected to boost
the company's near-term results.
However, fluctuation in operating expenses, due to project
ramp ups, is likely to hurt margins. Although we believe that
increasing spending on optical upgrades will help the company to
counter sluggish macroeconomic conditions over the long term, the
company may lose market share due to stiff competition from
Currently, Ciena has a Zacks Rank #3 (Hold).
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