Weak demand drags down Ciena's Q3 results
Waning demand in the telecom sector continued to drag down Ciena Corp.'s quarterly results. The telecom gear maker posted a loss of $160 million, or 42 cents a share, on revenue of $50 million for the third quarter.
Over the last year, Ciena has shuttered plants and product lines and reduced its work force. The restructuring efforts are designed to help put its expenses more in line with customer demand. The $50 million in third-quarter revenue Ciena posted is an 89 percent drop from the $458.1 million the company reported in the third quarter 2001. The company took a $18.6 million restructuring charge during the third quarter.
Ciena's shares were shedding more than 4 percent of their value in mid-morning trading. The fact that Ciena's revenue fell came as no surprise to analysts as the company had warned in June that its third-quarter results would likely fall below second-quarter levels. Analysts were not, however, expecting such a drastic drop. In the second quarter, Ciena posted revenue of $87.1 million. According to a Thomson First Call survey, analysts were predicting third-quarter revenue of $68.1 million.
Looking ahead to the fourth quarter, Ciena expects revenue to be flat or slightly above the $50 million posted in the third quarter. Analysts had been expecting Q4 to produce $78.4 million in revenue, according to a survey conducted by Thomson First Call.
"Service providers' re-evaluation of their networks and their business models has resulted in uncertainty and volatility in the telecom equipment industry, but we believe longer-term, this process will provide the opportunity for new leaders to emerge," said Gary Smith, Ciena's president and CEO. The company hopes to restore revenue stability and growth over the course of 2003, said Smith.