Ciena Pulls Ahead After Q2 Profit Beats Street

Dodging the economic bullet that has hit many of its rivals, Ciena (Nasdaq: CIEN) advanced US$3.46 to $58.90 in early trading Thursday, after the company reported that its second-quarter profit climbed more than 19 percent to top analyst forecasts.

The Linthicum, Maryland-based company attributed the strong showing to surging customer demand for its next-generation optical networks.

"Ciena's business has demonstrated remarkable resilience throughout these last several quarters of tightening macro-economic conditions," said executive chairman Patrick Nettles.

In addition to posting its results for the period, Ciena also announced that it has promoted chief operating officer Gary Smith to chief executive officer, while Nettles, who served as chairman and CEO, will immediately assume the role of executive chairman. The firm did not provide a reason for the management change.

Ciena said its second-quarter profit, excluding one-time items, soared to $65.4 million, or 20 cents per share, from an adjusted $55.1 million, or 18 cents per share, in the previous quarter. Analysts surveyed by earnings tracker First Call/Thomson Financial had expected earnings of 16 cents per share for the period.

After factoring in $75.7 million in charges for its recent Cyrus Systems acquisition and other onetime events, Ciena posted a net loss of $50.7 million, or 17 cents, in the second quarter.

Sales jumped 20 percent, to $425.4 million from $352 million in the first quarter, and more than 129 percent compared to the $185.7 million posted in the year-ago period.

During the second quarter, the company also said it added eight new paying customers, including Dynegy, Genuity, Tycom and Level 3 Communications.

Looking ahead, Ciena reiterated an earlier prediction that it is "possible" for the company to achieve 2001 revenue growth of 95 to 105 percent over year 2000, and earnings of 72 cents to 75 cents a share, provided economic conditions do not change "dramatically." The current Wall Street estimate is 73 cents per share.

Ciena is one of the few telecommunications equipment makers to avoid a slumping sales amid curtailed spending in the sector. Many of its competitors -- including industry giants Cisco Systems (Nasdaq: CSCO), Lucent Technologies (NYSE: LU) and Nortel (NYSE: NT) Networks (NYSE: NT) -- have been forced to slash earnings forecasts and cut their work forces in recent months.