After disconcerting investors the previous quarter because of an earnings shortfall (see “Ciena 4Q13 earnings miss causes concern”), optical transport systems and switch vendor Ciena Corp. (NYSE: CIEN) has regained many fans with its first quarter 2014 performance. The company reported revenues of $533.7 million in the quarter up about $80 million from the same quarter a year ago, as well as sequential improvements in GAAP gross margin and operating margin.
The revenue for the quarter, which ended January 31, 2014, fell within the upper end of the company’s guidance of $515 to $545 million. Revenues were down about $50 million from the $583.4 million of the fourth quarter of 2013, but well exceeded the $453.1 million enjoyed in 1Q13.
GAAP gross margin was 42.3%, a jump from the previous quarter's 39.7%. Gross margin in the first quarter of 2013 was 43.2%. GAAP operating margin in 1Q14 was 0.6%, better than both the previous quarter (-0.1%) and the year-ago quarter (-1.2%).
GAAP net loss for the recently completed quarter was $15.9 million ($0.15 per common share), a significant improvement over the GAAP net loss of $47.3 million ($0.47 per common share), for the year-ago quarter. GAAP net loss for the previous quarter was $9.8 million ($0.09 per common share). GAAP operating margin squeaked onto the plus side a 0.6%, versus -1.2% for 1Q13.
On a non-GAAP basis, net income for 1Q14 was $13.7 million ($0.13 per diluted common share), versus $12.3 million ($0.12 per diluted common share) for the first quarter of 2013. The quarter's success beat consensus pre-announcement estimates by about $0.07.
“Solid execution in our fiscal first quarter, including 18% year-on-year revenue growth and 6% adjusted operating margin, demonstrates our continued momentum, reinforces our market leadership, and positions us well for the long-term opportunity ahead,” said Gary B. Smith, president and CEO, Ciena, via a press release. “We continue to benefit from the strategic decisions we’ve made to expand our role and reach in the market, driving more consistent performance and progress toward achieving our long-term operating targets.”
Looking ahead, management guided upwards for the current quarter’s revenue expectations. Ciena says revenues should range between $540 million and $570 million. Non-GAAP gross margin should be in the low 40s percent range, with non-GAAP operating expenses at approximately $210 million.
Investors appear to be having a hard time deciding how they feel about the quarter. The stock price opened this morning up significantly, but has fallen throughout the day. As of 12:39 PM, the stock was at $24.54, down $0.82 (3.23%).
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