* Adjusted Q1 shr loss $0.12 vs Street view loss $0.06
* Q1 revenue $175.9 million vs Street view $184.6 million
* Deal for Nortel assets on track for closing
* Ciena shares down 7 percent
(Adds analyst comments, executive interview)
By Paul Thomasch
NEW YORK, March 4 Telecommunications network
equipment maker Ciena Corp CIEN.O posted a
wider-than-expected quarterly loss and revenue that missed Wall
Street expectations, sending its shares down 7 percent.
The company said delays in revenue recognition related to
the deployment of new platforms for some customers hurt its
results, even as phone companies upgraded their networks to
handle growing Web traffic, including on smartphones.
Ciena, which is set to buy a unit of Nortel Networks Corp
NRTLQ.PK, also forecast current-quarter revenue of $185
million to $195 million before the combination. The average
analyst forecast is $194 million, according to Thomson Reuters
"Although we are not surprised that the stock comes under
pressure considering the high expectations, we imagine
investors will look past light sales to a consistent outlook
for the April quarter and long term opportunities," Morgan
Keegan analyst Simon Leopold said in a note.
He added, however, that the Nortel deal raised concern in
his mind about "significant sales challenges" and the "risk
from product overlap."
Ciena Chief Executive Gary Smith, who predicted the Nortel
deal would close later this month, said some of the first
quarter's delayed revenue would show up in the the current
quarter, while the market was showing signs of improvement.
"Overall, I would say sentiment is improving, certainly in
North America," Smith said in an interview. "I would describe
Europe as country-specific and patchy."
As for Ciena's major customers -- a roster that includes
carriers like AT&T (T.N) and Verizon Communications (VZ.N) --
demand for mobile and video services continues to grow and
require investment, he said.
"While global market conditions still indicate some
uncertainty, we see some signs of improvement, particularly in
North America," he said.
He said the company is witnessing a "strong order flow."
At the moment, Ciena is not forecasting results that take
into account the Nortel deal. Guidance that includes the
acquisition probably will not come before an investor day in
April, analysts said. Ciena is paying about $769 million for
the division in a deal that will double its size.
The supplier of optical switches and other equipment used
to direct Internet traffic posted a net loss of $53.3 million,
or 58 cents per share, for its fiscal first quarter that ended
Jan. 31, compared with a loss of $24.8 million, or 27 cents a
share, in the same quarter a year before.
Excluding unusual items, the loss was 12 cents a share,
compared with Street expectations for a loss of 6 cents.
Revenue rose 5 percent to $175.9 million, less than the
average analyst estimate of $184.6 million.
Shares of Ciena fell 5.6 percent to $13.73 in trading on
Thursday, recovering from an earlier low of $13.04.
(Additional reporting by Ritsuko Ando and Tiffany Wu, editing
by Maureen Bavdek, John Wallace and Robert MacMillan)