Ciena Sees Sales Shortfall

The stock plunges 20% after yet another warning from a onetime Wall Street favorite.
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Updated from Aug. 3

Ciena

(CIEN) - Get Report

warned late Tuesday of a sharp sales shortfall as the telecom network spending market remains slow.

The Linthicum, Md., maker of optical networking gear forecast third-quarter sales of $75 million, which is $20 million short of the Wall Street analyst consensus estimate. The company said it would lose 7 or 8 cents a share on an operating basis during the quarter, which is in line with the Thomson First Call estimate, as a result of sharp cost-cutting. A year ago, the company lost 9 cents a share on that basis.

Counting all costs, Ciena expects to lose 25 cents a share.

Ciena cited slow industrywide spending, notably including a deceleration in digital subscriber line, or DSL, orders during the period. Big telcos such as

Verizon

(VZ) - Get Report

,

SBC

(SBC)

and

BellSouth

(BLS)

use DSL to provide customers with Internet access in competition with big cable companies.

The warning comes on the heels of a number of setbacks at Ciena, which once was a Wall Street favorite but recently has repeatedly come up short of its financial targets. Analysts say the company has failed to come up with a hot product to sell to penny-pinching telcos following the early success of its CoreDirector gear.

The stock slipped 20% to $2.22 in early Wednesday action.