Ciena's New Look Gets a Once-Over

For that reason, analysts will be listening Thursday for updates on the challenges confronting Ciena's transformation from all-optical specialist to all-around data gearmaker.

On the Run

But the early reports haven't been altogether encouraging. At two recent investment conferences, Ciena strategy chief Steve Chaddick has been noticeably dour when describing the outlook for optical sales, saying there's very little sign of recovery ahead. And while there's plenty of opportunity in selling other hardware, such as so-called aggregation devices that help telcos merge different types of traffic onto one pathway, it's not clear that Ciena's gear has an edge over all the others.

Lehman Brothers analyst Steve Levy is among those warning that Ciena's stock appreciation may be outrunning actual performance. Given the somber tones of the recent executive commentary, Thursday's earnings report may not hold many upside surprises, he warns.

"We do not see Ciena posting October quarter sales well ahead of guidance, so these expectations do not leave much room for incremental improvement or other positive surprises," Levy said in a research note Monday.

In August, executives said fourth-quarter sales could be as much as 5% higher sequentially, or about $72 million. But Wall Street is expecting more like $70 million. On the earnings side, analysts polled by Reuters Research, formerly Multex, expect a net loss of 9 cents per share -- flat with the third quarter and a 6-cent improvement from the year-ago period.

One potential bright spot could come on the optical gear side. There, executives may have some news to share about a defense department network construction project called GIG BE. Ciena is expected to get a piece of the lucrative supply contract.