Revenue Forecasts Mixed at Optics Firms

Nortel Networks Corp., the world’s No. 1 supplier of fiber-optic telecom equipment, slashed its 2001 revenue forecast by half Thursday, saying that it will post a first-quarter loss and increase job cutbacks to 10,000.

In contrast, optical equipment maker Ciena Corp. raised its revenue forecast, citing growing demand for switches and transmission equipment for optical networks.

Ciena gave its optimistic outlook as it said earnings for its fiscal first quarter surged more than fivefold to $54.1 million, or 18 cents a share, from $9.1 million, or 3 cents, a year ago. The results beat analysts’ expectations of 15 cents, according to First Call/Thomson Financial.

Ciena’s shares rose $12.19, or 16%, to close at $89 on Nasdaq.

Nortel’s announcement, which came after the markets closed, sent the company’s shares down nearly 23% to $22.98 in after-hours trading on the Instinet. Nortel had closed at $29.75, up 20 cents, on the New York Stock Exchange.

Nortel said it expects first-quarter revenue of $6.3 billion and an operating loss of 4 cents a share amid an expected 20% decline in the U.S. market, led by a slowdown in optical equipment sales.

That is an 18% cut from the $8.1 billion in revenue forecast by analysts polled by First Call and a dramatic drop from earnings forecasts of 16 cents a share.

The company said it is seeing a faster and more severe economic downturn in the United States--which represents 65% of sales--and that revenue would grow by 15% and earnings by 10% in 2001.

Last month, Nortel predicted earnings of 30% in 2001, reduced from a December forecast of 30% to 35% growth.

Brampton, Canada-based Nortel also said it will eliminate 10,000 jobs to boost profitability, increasing the number of cutbacks from the 4,000 announced in January.

Ciena, meanwhile, said it expects fiscal 2001 revenue of $1.67 billion to $1.76 billion, well above a First Call consensus estimate of $1.53 billion.

Chief Financial Officer Joseph Chinnici told analysts that the Linthicum, Md.-based company expects second-quarter earnings of 15 cents to 17 cents a share and full-year earnings of 73 cents to 75 cents a share. The First Call forecasts are 15 cents and 66 cents, respectively.

In its first quarter, Ciena’s revenue soared to $352 million from $152.2 million, topping First Call estimates of $315.4 million.

Earlier this week, JDS Uniphase Corp., the world’s No. 1 supplier of fiber-optic components, warned analysts that its third-quarter earnings would be about 17 cents, below estimates of 21 cents.

JDS said it was affected by its acquisition of SDL Inc., a weakening U.S. economy and customers such as Nortel working through stockpiled inventory.