Ciena Posts Loss as Carriers Cut Spending
Telecommunications equipment maker Ciena Corp. posted a larger-than-expected quarterly loss Thursday as lower spending by its telephone carrier customers hammered sales.
Ciena, which makes equipment that increases the capacity of fiber-optic telecom networks, added that revenue may fall further in its current quarter and its stock fell to lows it had not seen in more than 3 1/2 years.
“We are seeing our customers go to extreme measures to conserve cash,” said Ciena President and Chief Executive Gary Smith, adding that he did not know when the industry will recover. “Given the scale of the excesses of the last few years, it’s taken a while to flush all this out.”
The company reported a net loss of $612.2 million in the second quarter ended April 30, or $1.86 a share, compared with a year-earlier net loss of $50.7 million, or 17 cents a share. Excluding one-time charges and other items, Ciena posted a loss in the quarter of $208million, or 63 cents a share, three times the loss Wall Street was expecting.
The quarter included a larger-than-normal excess inventory charge of $223.2 million related to long-distance products. Excluding that charge, Ciena said its per-share loss would have been in the range of 19 cents to 23 cents. Revenue in the quarter plunged to $87.05 million from $425.4 million last year.
The company had held up better than most optical networking suppliers, but as spending slowed at such large carriers as Sprint Corp. and Qwest Communications International Inc., Ciena was forced to trim forecasts and cut jobs.
“It is ugly across this industry and Ciena certainly has reflected the stress that exists throughout the whole optical networking sector,” said Andy Schopick, vice president of research at Nutmeg Securities, a boutique broker-dealer in Connecticut.
Ciena’s stock fell as low as $5.90 in early Nasdaq trading, a level not seen since October 1998.
Its shares closed off 36 cents, or 5.6%, at $6.08, and is down 96% from its all-time high of $151 in October 2000.
