Ciena ( CIEN) reported second-quarter revenue that rose sequentially, but the networker said the continuing spending crunch in the telecom sector could leave its top line for the next quarter below analysts' estimates.

In a press release Thursday morning, the company said revenue for the second quarter totaled $73.5 million, up 4% from the first fiscal quarter, but down from $87.1 million in the year-ago quarter. Ciena posted a loss for the quarter of $75.5 million, or 17 cents a share. In the same quarter a year ago, the company lost $612.2 million, or $1.86 a share.

Excluding several items, the company lost 10 cents a share. Using that figure, which doesn't adhere to generally accepted accounting principles, the company reported a narrower than expected loss. On average, analysts polled by Thomson First Call were looking for a loss of 12 cents for the second quarter.

The company said its customers "continue to exercise extreme spending caution, perpetuating the challenging telecom equipment environment." As a result, Ciena forecast third-quarter revenue of $65 million to $75 million. The consensus estimate is $76.4 million.

"We expect that the addition of revenue from new customers, like BT, and new market opportunities such as those provided by the acquisition of WaveSmith, will help to drive sequential revenue growth as we exit the fiscal year," the company said. "In the meantime, we continue to take steps to align our operations and our resources with our market opportunities and to minimize our operating expenses without jeopardizing future potential growth."

In premarket Instinet trading, shares of Ciena were off 2.6% to $5.24.

Ciena executives have made it clear that they are willing to take on several quarters of losses to ascend the networking-supplier ladder. But critics haven't been nearly as comfortable with the gushing red ink. They point out that the company's quarterly break-even revenue level is $200 million -- roughly three times recent sales levels.

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