Ciena rises on strong earnings, upbeat outlook

Ciena topped earnings and revenue estimates Thursday with a strong first quarter. CEO Patrick Nettles said he expects Ciena's business will continue to grow faster than the overall market, and raised revenue projections for 2001.

Shares in Ciena (Nasdaq: CIEN) were up 8 percent on the Island ECN ahead of Thursday's opening bell. The stock had closed up $7.62 to $76.81 Wednesday. Ciena makes fiber-optic equipment for telecommunications firms.

Revenue of $352 million came in above First Call's estimated $315.36 million. It was also up 22 percent over fourth-quarter revenue of $287.6 million, and up 130 percent as compared to last year's first-quarter revenue.

Adjusted net income for the first quarter, exclusive of payroll tax on stock option exercises, was $54.1 million, or 18 cents a share, topping First Call's estimate of 15 cents a share. That's a slight increase over the fourth-quarter's earnings of 14 cents a share, and well above last year's first-quarter earnings of 3 cents a share.

The company also revised its guidance for upcoming quarters. Including the acquisition of Cyras Systems Inc. Ciena said it now expects 2001's revenue growth to be between 95 to 105 percent over last year's. That translates into a revenue range of between $1.67 billion to $1.76 billion for fiscal year 2001. The company had said it expected annual revenue growth from 75 percent to 85 percent over 2000's last quarter.

On a conference call with analysts, officials said the company expects sequential revenue growth of 14 percent to 16 percent in its second quarter, up over previous expectations of 11 percent to 13 percent. Officials also said Ciena was raising projections for 2002; it now expects annual growth of 45 percent to 65 percent over 2001, compared to the previous forecast of 35 percent to 65 percent.

Ciena noted a slowdown in carrier spending, but wasn't complaining.

"There is no question that economic factors are causing service providers to more carefully scrutinize where they spend their budget dollars," president and COO Gary Smith said in a release. But it's a dynamic that actually helps Ciena by accelerating the shift from cumbersome, network architectures to cheaper, more efficient, optical networks, Smith added.

CEO Patrick Nettles emphasized on the call that Ciena sees strong growth and increasing visibility as it takes advantage of the shift from legacy to next-generation networks.

"Ciena's exclusive focus on next generation equipment puts us right on the sweet spot of (a) shift," Nettles said.