Fiber-optics equipment maker Ciena Corp. reported a net loss for its second quarter yesterday but said that revenue more than doubled and, not including an acquisition and other charges, the company's earnings more than tripled.
Company officials also announced that, effective immediately, Gary Smith, Ciena's president and chief operating officer, would become president and chief executive officer. Smith, who came to Ciena in 1997 to set up the company's international business and later ran worldwide sales, will focus on the day-to-day operations of the business in his new role.
Patrick H. Nettles, former chairman and chief executive, will become Ciena's executive chairman. He will handle the company's strategic long-term outlook, including partnerships, mergers and acquisitions and relationships with senior level executives in customer companies, Nettles said.
"We want to make sure that we're looking further out, to make sure that we're doing the right thing strategically," Smith said.
Ciena had a net loss of $50.7 million, or 17 cents per diluted share, for the three months that ended April 30. Revenue more than doubled to $425.4 million from $185.7 million in the second quarter last year.
Not including costs associated with the acquisition of Cyras Systems Inc., deferred stock compensation, payroll taxes on stock option exercises and amortization of intangibles and goodwill, Ciena's earnings were $65.4 million, or 20 cents per diluted share, in the quarter. That compares with adjusted earnings of $19 million, or 6 cents per diluted share, posted for the year-earlier quarter. Analysts surveyed by Zacks Investment Research had expected the company to earn 16 cents per diluted share on an adjusted basis.
"They're doing what their competitors can't do," said Prospero Roda, an analyst for Global Capital Securities in Baltimore.
Roda said what makes Ciena different from competitors is that the Linthicum-based company is sticking to its previous financial forecast, announcing new customers and topping analysts' estimates.
Company officials also were happy.
"Frankly, it's an extraordinary quarter, given what our competitors are doing and the performance of our competitors and the environment generally," Smith said.
Company officials said yesterday that they still thought Ciena could achieve revenue growth this year of 95 percent to 105 percent above the previous year, and that annual earnings could match analysts' consensus estimates of 72 cents and 75 cents per share if the economy doesn't deteriorate further. The company earned 33 cents per share in fiscal 2000.
During a conference call yesterday, several analysts congratulated company executives on the performance, especially as the economy slows and the telecommunications industry, in particular, struggles.
During the call, Ciena executives said they won a contract with Level 3 Communications Inc. Level 3 was already a customer, but yesterday's news was that it would be using a new product that Ciena acquired when it bought Cyras Systems Inc.
Cyras makes optical switching systems for metropolitan areas. The systems recharge wavelengths of light carrying information, protect the data being sent, reroute information if there's a break in the network and drop off data at different points along the network.
Level 3 is the first announced customer to use the Cyras product. Financial terms of the deal were not disclosed.