Ciena's

(CIEN) - Get Report

got hot gear and more big customers to sell it to, but the story hasn't completely won over all the skeptics.

For the

fiscal second quarter ended in April, the Linthicum, Md., optical networking shop swung to a penny-a-share adjusted profit after years of deep red ink. And looking ahead, Ciena says it expects sales to grow as much as 10% over fiscal second-quarter levels.

In a sector with stodgy players such as

Nortel

(NT)

and

Lucent

(LU)

grappling with single-digit top-line growth, Ciena stands out with its projected 30% year-over-year sales growth this year.

And critics of the company's thin customer list have gone silent, now that big names like

Sprint

(S) - Get Report

and reseller

Ericsson

(ERICY)

helped make some of the biggest revenue contributions in the quarter.

One blemish on Ciena's well-polished tale was on the gross margin line, though. It widened to 48.4%, well ahead of expectations. But the five-quarter margin widening streak will end there, says Ciena, predicting a leaner 45% gross margin for the remainder of the year.

Fretful investors always like to see sales and margins rise in tandem.

"The mid-40s range is a good achievement for the market we are in," says Ciena CEO Gary Smith in an interview Thursday.

Smith says that Ciena has come a long way in its four-year turnaround adventure and that there is still a lot of work ahead.

"We are rebuilding the company. And profitable growth is driving us, turning our company through it," says Smith.

Helping pad margins and stoke new sales was Ciena's CN 4200, a multiservice box that helps phone and cable companies manage a variety of network traffic through one junction point.

The technology, which Ciena acquired with the purchase of Internet Phonics during its buying spree a few years ago, is what the company calls programmable hardware. The gear is designed to give network operators flexibility as they upgrade from old line technology.

Outfits like cable giant Cox have installed the 4200 to help deliver triple-play services such as video, phone and Internet to customers.

Observers see the 4200 multiservice platform as a potential repeat of the successful CoreDirector optical switch.

Smith says he's happy having another hot product on his hands, especially if it helps open doors to new customers.

"When we retooled our business, that was one of our objectives," says Smith, referring to the need to find new technologies and broaden the customer roster. During the telecom collapse, Ciena's fortunes fell along with those of its phone company customers.

"We were mindful, as we were reinventing the company, to make sure that doesn't happen again," Smith says.

Ciena shares rose 15 cents, or 3%, to $4.45 in midday trading Thursday.