Sagging

Ciena

(CIEN) - Get Report

posted another quarterly shortfall Thursday.

For the second quarter ended April 30, Ciena lost $76.2 million, or 16 cents a share. That's roughly flat with the year-ago loss of $75.5 million, or 17 cents a share. Sales inched up 1.6% to $74.7 million.

On a pro forma basis, excluding certain costs and not in accordance with accounting rules, Ciena's latest-quarter loss was $44 million, or 9 cents a share. That's a penny shy of the Wall Street estimate. Analysts surveyed by Thomson First Call had forecast an 8-cent-a-share loss on sales of $79 million.

The company continued to put a brave face on its troubles. "The last quarter was important for Ciena as we took significant and deliberate steps in two key areas aimed at improving our business in both the immediate and longer term," said CEO Gary Smith. "First, with the acquisitions of Catena Networks and Internet Photonics, we have added products to help build Ciena into a leading provider of service-delivery solutions. Second, we initiated the next phase of strategic operating expense reductions that will improve our cost structure and shorten the path to our near-term goals of achieving cash flow breakeven and profitability."

Smith also forecast a 30% rise in third-quarter revenue from second-quarter levels. That would put Ciena's revenue at around $97 million. For the third quarter, Wall Street expects a 6-cent loss on sales of $93 million.

The news comes as the Linthicum, Md., telecom gearmaker searches for a way to reverse a long slide in its business.

TheStreet.com

reported Wednesday that Ciena would cut 300 jobs, or a quarter of its workforce, as sales continue to stagnate.

Recent setbacks indicate that Ciena continues to lack a hot product that big telco customers are eager to expend their scarce capital dollars on. The company's industry-leading optical switch, the CoreDirector, is losing traction as phone companies shift toward rival products from

Sycamore

(SCMR)

and new equipment from

Alcatel

(ALA)

.

Ciena once billed itself as a pure play on the tech-happy optical future of the networking business. But the company changed its course soon after demand for big long-distance optical network gear ebbed. Nearly two years ago, Smith vowed that Ciena would invest its way through the downturn, giving Wall Street fair warning that the company would have to acquire technologies that phone companies were hungry for. The expansion has pushed the company beyond optical infrastructure into broadband services.

In keeping with the expanding networking strategy, the company

agreed in February to buy two closely held shops: Catena Networks, a maker of broadband access systems, and Internet Photonics, which makes optical Ethernet transport and switching solutions for cable companies and businesses. Ciena agreed to issue some 100 million shares in the deal,

worrying some investors about possible dilution.

But expanding offerings haven't meant growing sales for the company. And as a result, Ciena has come late to the cost-cutting game that rivals like

Nortel

(NT)

and

Lucent

(LU)

were suffering through in past years.

Last month, Ciena

set plans to close the former ONI facility in San Jose, Calif., laying off 425 workers. That move came just two years after Ciena paid $900 million to acquire ONI, viewing the deal as a way to break into the so-called metro optical market. ONI made telecom gear designed to merge synchronous optical network, or SONET, traffic onto next-generation optical networks known as wave division multiplexing, or WDM.

Ciena shares have plunged 40% since the company

warned in February of a sharp first-period sales shortfall. At the time, Ciena forecast that second-quarter sales would show a recovery, but the company's projections fell more than 5% shy of the contemporary Wall Street estimate.

About the only bright spot for Ciena in the last quarter came from a

deal to supply optical equipment for the long-distance portions of

MCI's

network.

Early Thursday, Ciena slipped 15 cents to $3.73.