Updated from 9:12 a.m. EST Frosted by the industrywide spending freeze, Ciena ( CIEN) is whittling its business down to the core. The maker of optical telecom gear Tuesday laid plans to focus its business more closely on its highly successful CoreDirector optical switch. Alas, the idea didn't exactly visit Ciena CEO Gary Smith in a dream: The company arrived at the decision as its customers, big telcos such as Qwest and Sprint, continue to trim back on spending for optical transport gear, which they bought by the warehouseful last year. Evidence of the pain felt across the telecom industry was served up Tuesday in Ciena's preopen earnings warning. The onetime Wall Street favorite projected a steep loss, undercut analysts' first-quarter revenue expectations for the second time in three months and said it would cut 400 jobs, or 12% of its staff. Its stock, down 90% over a year, dropped 7% to $9.43, steepening a 16% plunge that started Monday.
Without offering any specific guidance, Ciena also said it expects second-quarter revenue to be flat with or below first-quarter levels. Analysts had projected second-quarter revenue of $222 million, down from the year-ago $425 million.