Communications-equipment maker Ciena ( CIEN) said its fiscal second-quarter profit nearly doubled from a year ago on better-than-expected sales results. The Linthicum, Md., company said it had a profit of $23.8 million, or 23 cents a share, up from $13 million, or 14 cents a share, in the year-ago quarter. Excluding items, Ciena earned 40 cents a share in the quarter. Revenue in the quarter jumped 25% from a year earlier to $242.2 million and was up 7% sequentially. Wall Street was expecting a profit of 37 cents a share on revenue of $238.3 million, according to Thomson Reuters. Still, shares of Ciena were down $1.28, or 4.2%, to $29.18. Additionally, the company reiterated its forecast that fiscal full-year sales will increase 27% above the previous year's level to $990.4 million. That compares to analysts' estimates of $985.5 million. "Ciena continues to execute against a business plan and strategy that has driven faster-than-market growth while delivering solid operating margin and net income," said CEO Gary Smith in a press release. "In a highly competitive market, Ciena differentiates itself with targeted, innovative solutions and our implementation of automated, software-centric networks that power new applications and help our customers realize the economic benefits of a single, converged network infrastructure." Ciena's positive earnings growth is surprising considering the woes facing competitors Nortel ( NT), Alcatel-Lucent ( ALU), and Tellabs ( TLAB), all of which have swung the ax as part of restructuring plans.
In a post-earnings call with TheStreet.com, Smith said that the shift from voice architecture networks to Ethernet-based architectures is at the start of a cycle that will challenge companies to scale their networks more efficiently. "If you look at the last build cycle, it lasted 10 years and what you're seeing now is the start up of a new cycle," Smith says. "This is going to be a longstanding trend that's going to take years. It's easier for us, though. We're a relatively young company in the telco space, and we've always been focused on the data-centric networks. We don't have the baggage of investing in old equipment." During Ciena's last earnings call, Smith said the company provided rosy full-year guidance due to more clarity from the market at that time. "I wouldn't say there's more clarity now, as it's a lumpy market dependent on a few carriers," he adds. "Overall, I think the opportunities and the dynamics of the market place are pretty positive. Certainly the demand is there."