(Reuters) - Network equipment maker Ciena Corp forecast current-quarter revenue well above estimates and said it expected growth to continue into the second half of the year, driven by a widening customer base.
Shares of the company, which also reported better-than-expected second-quarter profit and revenue, rose as much as 18 percent in early afternoon trade.
“They have diversified into web 2.0, finance, education, healthcare and energy,” Dougherty & Company LLC analyst Catharine Trebnick said.
“They are less concentrated around two top Tier 1 carriers, so their top 10 customers now generate 60 percent of the total revenue as opposed to 65 percent a year ago,” Trebnick added.
AT&T Inc and Verizon Communications Inc are Ciena’s top carrier customers.
Ciena, which makes equipment that expands the capacity of data transfer over fiber-optic networks, forecast third-quarter revenue in the range of $585 million to $615 million, above analysts’ average expectation of $583.3 million, according to Thomson Reuters I/B/E/S.
The company is benefiting from U.S. telecom carriers and cable operators spending more on networks to meet rising demand for faster internet connectivity, as more customers use smartphones, tablets and high-definition televisions to stream high-bandwidth data.
“Web 2.0 infrastructure-as-a-service players are driving enormous traffic growth. As we move more traffic to the cloud it requires an optical backbone to build it,” Needham & Co analyst Alex Henderson said.
AT&T’s bid for DirecTV and Comcast Corp’s proposed $45 billion takeover of Time Warner Cable Inc are indicative of the rise of web-based TV and surging mobile Internet usage.
Ciena, which transferred its listing to the New York Stock Exchange and began trading there on Dec. 23, said its net loss shrank to $10.2 million, or 10 cents per share, in the second quarter ended April 30, from $27.1 million, or 27 cents per share, a year earlier.
Excluding items, the company earned 17 cents per share on revenue of $560.1 million.
Analysts had expected earnings of 13 cents per share on revenue of $559.3 million.
Ciena also said a single customer accounted for 21.5 percent of total revenue during the quarter. Trebnick suggested this customer was AT&T Inc.
Shares of the Hanover, Maryland-based company, whose rivals include Huawei Technologies Co Ltd [HWT.UL], Juniper Networks Inc and ZTE Corp, closed at $18.99 on the New York Stock Exchange on Thursday.
Reporting By Lehar Maan in Bangalore; Editing by Simon Jennings