Ciena misses revenue, beats earnings in third quarter 2015

Optical systems and software-defined networking (SDN) technology vendor Ciena Corp. (NYSE: CIEN) reported mixed results for its fiscal third quarter ended July 31, 2015. The company said it saw revenues of $602.9 million and non-GAAP net income of $50.7 million ($0.37 per diluted common share). The revenue figure missed the company's guidance of $610 million to $640 million (see "Ciena exceeds revenue expectations in second quarter") and fell short of Wall Street's expectations by approximately $27 million. However, the earnings figure beat consensus estimates by $0.03.

Third quarter revenue was off $18.7 million sequentially and year-on-year by $0.7 million as well. Ciena President and CEO Gary B. Smith laid the blame for the revenue miss at the feet of "short-term revenue headwinds related to the timing of network implementations at certain large service provider customers." The headwinds appear to have affected sales of the company's Converged Packet product line most strongly. Revenues from such products declined sequentially by $24.9 million during the quarter, the only product segment to see a sequential downturn.

GAAP gross margin was 44.8%, up sequentially from the second quarter's 43.8%. Non-GAAP gross margin was 45.3%, also up sequentially.

Company management expects to get back on the good foot in fiscal fourth quarter 2015, albeit with a full quarter of results from recently acquired Cyan (see "Ciena closes Cyan acquisition, begins integration"). The company forecasts revenues in the range of $665 million to $700 million and non-GAAP gross margin of approximately 44%.

Ciena also announced that it has promoted François Locoh-Donou from senior vice president of the Global Products Group to COO, effective November 1. Locoh-Donou will assume responsibility for Ciena's Global Field Organization, including the global sales and services functions, while retaining his existing responsibility for research and development, product line management, supply chain, and network integration functions.

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