Ciena expects higher earnings

Ciena has pre-announced earnings for the fourth quarter that are on the high-end of analysts’ estimates.

For the quarter ending Oct. 31, the company expects revenue of $367.8 million, up 27% year-over-year. Adjusted net income per share is expected to be in the range of 4 cents to 6 cents. Consensus First Call estimates places the company’s EPS at 4 cents. Ciena’s official earnings report is scheduled to be released Dec. 13.

Ciena officials credited the positive news to the company’s focus on next-generation products and its alignment with carriers that are still spending.

In addition to the earnings news, the company said it was cutting its staff by about 10, or 380 positions. The affected employees will receive pay through Jan. 10, will be given outplacement assistance and training, and will be eligible for additional severance.

“The reduction is primarily concentrated in our manufacturing and operations staff,” said Ciena CEO Gary B. Smith. “As a result of our continuing efforts to improve manufacturing efficiencies, the greater availability of cost-effective optical manufacturing outsourcing options, and our customers’ changing spending patterns, we no longer require this much in-house manufacturing capacity to keep up with our customers’ demand.”

Much of Ciena’s in-house manufacturing is tilted toward production of the company’s transport products, so that sector will bear the brunt of Ciena’s manufacturing layoffs, Smith said.

Ciena will record a charge related to the workforce reductions of between $5 million and $6 million in the first fiscal quarter of 2002.

The company also will take a charge of $15 million to $16 million in the fourth quarter of 201 related to the consolidation of certain manufacturing facilities and business activities that are being restructured.

In addition, the company will write down about $1.7 billion in goodwill related primarily to the acquisition of Cyras Systems, which closed in March of this year. Cyras produces the K2 next-generation SONET platform.

Wall Street reacted positively to the announcements, sending Ciena’s stock up more than 11% to $19.10 in late morning trading.