Ciena lowers guidance

Despite beating analyst estimates for the quarter, Ciena lost more than 30% of its value today after lowering guidance for the fourth fiscal quarter.

For the quarter ending July 31, Ciena posted revenues of $425.4 million, identical to last quarter’s revenue but up more than 96% year over year. Net income, which excludes one-time items and amortization of intangibles and goodwill, was $58 million, or 17 cents per share. Consensus estimates from First Call/Thomson Financial, projected EPS to be 16 cents.

Though the company met estimates, there were some negative trends for Ciena in the quarter. Gross margins were down to 43.3% from 45.6% in the previous quarter. In addition, inventories were up sequentially to $306.6 million from $276 million.

But it was the earnings warning that caught the attention of analysts. Throughout the year, the optical equipment maker had appeared largely immune to the economic downturn, even raising its guidance in February. Such optimism, though, only seemed to set the stage for today’s precipitous fall.

According to Joe Chinnici, the company’s chief financial officer, Ciena now expects “revenues in Q4 to be down sequentially from Q3 by between 12 to 20% as a result of slower growth in the long-haul transport space and anticipated customer and product mix in the quarter.”

That puts revenue growth for the year in the 85% to 90% range, down from the 95% to 105% growth the company projected in February. EPS is expected to be between 2 cents and seven cents per share for the quarter and between 59 cents and 64 cents for the year.

For Ciena’s fiscal 2002, the company is projecting revenue growth in the low teens with EPS flat year over year.

Ciena stock price was off more than 30% late in the afternoon, trading at $19.641 per share.