Linthicum-based Ciena Corp. reported yesterday an unexpected profit of $2.3 million in its first fiscal quarter on wider sales but warned that expectations should remain conservative.
Ciena's earnings for the quarter that ended Jan. 31 were 94 percent less than the $39.7 million in the year-earlier quarter, or 2 cents per diluted share vs. 37 cents.
But the telecommunications company, which makes equipment used to boost capacity on phone networks, had been expected to lose 1 cent a share, according to analysts surveyed by Zacks Investment Research.
Quarterly revenue was $100.4 million, down from $145.1 million for the same period a year ago.
"This is good progress. It's clear there are things we would like to improve, but we have a lot to be pleased with in terms of financial results," Patrick H. Nettles, Ci- ena's president and chief executive, said yesterday.
After explosive growth, Ciena, dependent on a few big customers, ran into trouble last year when some orders were delayed and competition from larger rivals such as Lucent Technologies Inc. and Pirelli SpA increased.
Then an AT&T; Corp. decision not to consider Ciena products ended its proposed $7 billion merger with Tellabs Inc. Its shares, which had traded as high as $80, plunged.
Nettles attributed part of the quarter's profit to good cost control in manufacturing and lower spending.
Also, the company has focused on reducing its reliance on just a few large customers. The company has progressed toward that goal as well, Nettles said.
Ciena sold products to 13 customers during the quarter, up from five customers a year earlier, he said.
This week Ciena announced a $200 million contract to provide a new class of equipment to a British company.
Despite the upturn in its fortunes, the company was cautious yesterday.
In a statement accompanying yesterday's earnings report, Nettles said, "We believe it's important not to let expectations of our performance get ahead of themselves.
"Demand for optical networking equipment continues to appear robust but based on visibility that remains limited beyond the current quarter, we continue to encourage conservative expectations," he said.
Ciena shares closed yesterday at $20.875, down $1.4375.
Pub Date: 2/19/99