Ciena Corporation (
reported fiscal third-quarter 2013 earnings (including stock
based compensation) of 16 cents per share, better than the Zacks
Consensus Estimate of 10 cents per share.
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Revenues for the quarter increased 13.6% year over year to $538.4
million, within management's guided range of $515.0 million and
$545.0 million. Reported revenues also beat the Zacks Consensus
Estimate of $535.0 million.
Product revenues, which accounted for 81.3% of total revenue,
increased 17.1% from the year-ago quarter to $437.4 million.
Services revenues, which comprised 18.7% of total revenue,
increased 0.2% year over year to $100.9 million.
Ciena witnessed continuous growth in demand from key markets,
such as mobile data, business services and app-driven
machine-to-machine connectivity. Moreover, the company's business
strategy and steadily improving performance across its end
markets helped the top line in the quarter.
Ciena reported non-GAAP gross profit of $228.2 million, which
increased 25.9% from the year-ago quarter. Gross margin expanded
420 basis points (bps) on a year-over-year basis to 42.4% due to
favorable product mix. Including share-based compensation, gross
profit came in at $233.6 million while margins came in at 43.4%.
Operating expenses on a non-GAAP basis increased 9.7% year over
year to $199.2 million, primarily due to an increase in research
and development, selling and marketing and general and
administrative expenses. Excluding share-based compensation,
operating expenses came in at $190.4 million.
Ciena reported operating profit of $34.4 million, compared with
$5.1 million in the year-ago quarter. Net income on a non-GAAP
basis was $26.2 million, up from a loss of $4.2 million in the
Ciena exited the quarter with $478.2 million in cash and cash
equivalents versus $356.5 million in the previous quarter. During
the quarter, cash flow from operations was $42.0 million.
Ciena expects fiscal fourth-quarter 2013 revenues to range
between $550 to $580 million,. Adjusted gross margin (excluding
one-time operating items) is projected to be in the lower 40.0%
range, while adjusted operating expenses are expected to be in
the high $190 million range.
We believe that increasing spending on optical upgrades and
demand from customers will help the company to counter sluggish
macroeconomic conditions. Moreover, the company's Tier 1 contract
wins and strong order flow are expected to provide a significant
competitive edge over its peers going forward. Additionally, an
expanding customer base will boost the top line in the near term.
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
Cisco Systems (
Alcatel-Lucent S.A (
Ciena has a Zacks Rank #3 (Hold).