Ciena sees charge from customer default

Ciena Corp. (Nasdaq: CIEN) said Tuesday it may not be able to collect up to $28.2 million from one of its customers, and will see a charge of 6 cents a share in its fourth quarter as a result.

Ciena said it expects to record a one-time charge related to a provision for doubtful accounts in its fourth fiscal quarter ending October 31, because Iaxis Ltd., one of its European customers, has filed for reorganization and will be unable to pay the $28.2 million in net accounts receivable which it owes Ciena.

Shares in the company, which makes multiplexing systems for fiber-optic telecommunications networks fell 2.25 to 227.86 Tuesday. The company had just posted strong third quarter results.

The impact of the charge on Ciena's net earnings per diluted share in its fourth fiscal quarter is expected to be up to approximately 13 cents a share, or 6 cents a share on a post-split basis. Ciena had announced a two for one stock split payable on September 18.

Iaxis Limited is the optical networking customer that Ciena disclosed as having financial difficulties in its Form 10-Q filed on August 17. As the company said in that filing with the SEC, net outstanding receivables from Iaxis represented about 13 percent of Ciena's net receivables as of July 31.

Ciena had no projections of future revenue from Iaxis, and at this time believes that its accounts receivables from its other customers are fully collectible. In addition, this event does not impact Ciena's previously announced expectations for future revenue growth.

"This situation is the result of issues particular to a single customer and is not indicative of our outlook for the optical networking industry," said Ciena's president and CEO Patrick Nettles in a statement.
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