Ciena: Orders getting bigger, profit next year

After declining to predict Ciena’s break-even date for some time, chief executive Gary Smith said today he expects the company to reach profitability before the company’s next fiscal year ends on Oct. 31, 2006.

The projection came amid a successful quarter for Ciena, which beat revenue and earnings estimates for its fiscal fourth quarter of 2005. Ciena reported $118 million in revenue for the quarter, a 7% sequential increase and a 44% increase over that reported a year ago. For the fiscal year, Ciena’s revenue was up 43% to $427.3 million.

The company’s $252.9-million (or $0.44 per share) net loss for the fiscal fourth quarter was roughly half the size it was a year earlier. And its $435.7-million (or $0.76 per share) net loss for the fiscal year represented an improvement of about 45%.

The profit Ciena expects next year will be on an “adjusted” basis, as the company is unsure of the effect of the Financial Accounting Standards Board’s 123R, a new accounting rule requiring the reporting of share-based payment transactions.

During this morning’s conference call, Ciena also reported seeing an increase in the size of customer orders across all product areas, as orders from old and new customers alike begin to exceed $10 million. “We’re seeing it from a number of customers,” Smith said. “It’s not just one or two.”

The company’s revenue appears to be broadening as well; though three companies contributed more than 10% of Ciena’s revenue for the fiscal year (BellSouth, Verizon Communications, and the U.S. military, whose Gig-BE network is now beginning to carry live traffic), only one customer accounted for more than 10% of revenue in the fiscal fourth quarter.

Ciena reported a goodwill charge of $176.6 million for its broadband access products after announcing in October its intention to back out of the broadband loop carrier market.

Ciena ended the quarter with 1497 employees, the same number it had the beginning of the quarter, but the company has cut an undisclosed number of workers since the quarter ended Oct. 31, 2005.