Ciena Gets Closer To Being Profitable - InformationWeek

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8/21/2003
04:33 PM
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Ciena Gets Closer To Being Profitable

The telecom equipment maker halved its losses in the third quarter, as cost-cutting offset weak sales.

Telecommunications equipment maker Ciena Corp nearly halved its losses and moved closer to profitability in its fiscal third quarter. But overall, the company still offers a dim reflection of the market, as earnings came in lower than expected and the company projected even lower sales for the next quarter.

For its third quarter ended July 31, the company on Thursday posted a loss of $88.9 million, or 20 cents per share, an improvement from a loss of $160 million, or 42 cents per share, in the same quarter a year ago. Sales rose 37% to $68.5 million, up from $50 million in the third quarter last year. But that was still a bit below analysts' expectations--and a drop of 9% from the previous quarter.

Ciena says that extensive cost-cutting enabled it help offset weak sales in the equipment market for the quarter, and expects to continue to cut expenses on its way to profitability, slashing costs between 10% and 20% in the first half of fiscal 2004 .

But Ciena is still uncertain when its most important customers--the large phone carriers-- will start buying again. As such, the company said it expects revenue to fall somewhere between 5% higher and 5% lower in its fourth quarter.

One way Ciena is looking to offset those hesitant telcos is by expanding product offerings. Ciena also said Thursday that it will acquire storage area networking vendor Akara Corp. for $45 million in cash and stock. The deal is expected to close during Ciena's fourth quarter.

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