OT: Ciena earnings:
LINTHICUM, MD (Feb. 19) BUSINESS WIRE -February 19, 1998-- Completes
Alta Acquisition, Issues Guidance Toward Second Quarter and
Fiscal Year 1998 Expectations
CIENA Corporation (NASDAQ: CIEN), today reported revenue of $134.3
million for its first fiscal quarter ended January 31, 1998. This
compares with $53.9 million in revenue reported for the first fiscal
quarter of 1997 and $121 million for the previous quarter ended October
31, 1997.
Net income for the quarter increased to $39.8 million, or $0.37 per
share, compared with net income of $13.1 million, or $0.13 per share,
for the same period in 1996 and $37.3 million, or $0.35 per share, for
the fiscal fourth quarter 1997.
All earnings per share amounts represent diluted earnings per share as
defined within Statement of Financial Accounting Standards No. 128
(SFAS 128).
"We are particularly pleased with the quarter's results given the fact
that we are currently in the process of transitioning from being a
single product manufacturer to a Company with a broader product
family," said Patrick Nettles, CIENA's president and chief executive
officer. "It takes more than research and development to actually build
and deliver industry-leading DWDM products; it requires engineering for
manufacturability and an organization that is absolutely committed to
delivering on its promises to its customers. CIENA has proven that we
can do just that."
Demonstrating its ability to deliver, CIENA expects to begin
commercial shipments of its 40-channel, 100 gigabit per second capacity
MultiWave(R) 4000 during the second fiscal quarter as scheduled. CIENA
will be demonstrating the MultiWave 4000 system, running 40 channels at
50 GHz spacing, at booth #515 at the upcoming OFC trade show in San
Jose, February 24 to 26, 1998.
Commenting about the Company's income statement for the quarter,
Joseph Chinnici, CIENA's senior vice president, finance and chief
financial officer said, "As expected, CIENA's operating expenses
continue to increase, both in real dollars and as a percentage of total
revenue. We believe that investors should view this growth as evidence
of our commitment to building our infrastructure and growing our R&D
effort: critical steps toward sustaining the long-term potential of the
Company."
The Company also disclosed that it has recently received a material
update from WorldCom. Earlier in the week, WorldCom apprised CIENA of a
change in its deployment policy which will result in a substantial
reduction in system requirements from CIENA during fiscal 1998 as
compared to the prior year. According to information shared with CIENA
earlier this week, WorldCom purchased equipment during 1997 based on a
policy designed to meet an estimated two years' worth of anticipated
network capacity requirements. WorldCom's new policy calls for
purchasing activity and bandwidth deployment to transition to more
closely coincide with just-in-time bandwidth deployment, which,
according to WorldCom, means significant purchasing from CIENA may
resume in the latter part of calendar 1998.
"CIENA has been and remains our DWDM supplier of choice," said John
Sidgmore, WorldCom's vice chairman and chief operating officer. "During
1997, CIENA delivered more capacity and at a faster rate than we
frankly thought was possible. As a result, our long-distance capacity
deployment is ahead of schedule."
"While there may be a short-term slowdown in WorldCom's order rate to
CIENA, WorldCom has not changed its commitment to being the bandwidth
leader and intends to continue to aggressively provision the capacity
afforded by CIENA's DWDM systems throughout our growing network,"
concluded Sidgmore.
With respect to its relationship with AT&T, CIENA reported that it has
made important progress in AT&T's testing and evaluation process,
although volume, duration and timing of any purchases which might ensue
from AT&T remain unpredictable.
The Company also announced it completed its acquisition of ATI Telecom
International, Ltd. (Alta), a provider of telecommunications
engineering, furnishing and installation services.
"We continue to believe we have the best product at the best price for
AT&T and we are confident the testing and evaluation process is
confirming this view," stated Patrick Nettles. "We remain optimistic
about the revenue potential of this relationship for fiscal 1998 and
beyond and will continue to focus our efforts on obtaining the majority
share of the total opportunity. The addition of Alta provides CIENA
with the installation experience and extensive field support capability
required to assist a customer like AT&T with expeditious equipment
deployment."
The Company issued the following guidance regarding its fiscal second
quarter and the remainder of fiscal year 1998:
"In the past, we have cautioned investors about the potential for
fluctuations in quarterly results as a result of our highly
concentrated customer base," said Nettles. "The uncertainty resulting
from the recent news from WorldCom combined with our planned continued
re-investment in the business is likely to result in sequentially lower
net income for the second quarter."
"As it is still early on in the quarter, it is difficult to assess the
impact the WorldCom news will have on our top-line," continued Nettles.
"We intend to move aggressively to offset the majority of the revenue
shortfall from WorldCom, both in the second quarter and for the
remainder of fiscal 1998, with additional revenue from existing and
potential customers. However, at present, it appears likely that
revenue in the second quarter of fiscal 1998 will be sequentially flat
or possibly lower than that reported in the first quarter," said
Nettles.
"There is no doubt we have our work cut out for us, but it is very
early in the year, and based on the significant increase in proposal
activity we're experiencing in the U.S. and internationally, market
demand for DWDM systems appears to us to be accelerating," concluded
Nettles. "I am very optimistic we have a realistic opportunity to
achieve the consensus revenue expectations for fiscal 1998, which at
approximately $600 million, would represent a solid achievement in
year-to-year growth. More importantly, over the long-term, our product
line expansion and diversification will lead to a broader customer base
and a stronger, more robust revenue stream."
NOTE TO INVESTORS:
Forward-looking statements in this release, including statements
regarding (1) expected commercial shipments of the MultiWave 4000, (2)
optimism about the revenue potential of the AT&T relationship for 1998
and beyond, (3) the possibility that second quarter revenues will be
flat or possibly lower than the first quarter revenues, and (4)
optimism about achieving consensus revenue estimates for fiscal 1998
are based on information available to the Company as of the date
hereof. The Company's actual results could differ materially from those
stated or implied by such forward-looking statements, due to risks and
uncertainties associated with the Company's business, which include,
among others, its dependence on its major customers and their spending
patterns, the recent introduction of its products, and the overall
management of its expansion. The forward-looking statements should be
considered in the context of these and other risk factors disclosed in
the Company's Quarterly Report on Form 10-Q, as filed with the
Securities and Exchange Commission on February 19, 1998.
About CIENA
Based in Linthicum, Maryland, CIENA Corporation is a worldwide market
leader of open architecture, dense wavelength division multiplexing
(DWDM) systems for long-distance and local exchange carriers. CIENA's
DWDM solutions include the MultiWave(R) 1600 long-haul transport
system, WaveWatcher(R) network management software, the MultiWave
Optical Add/Drop Multiplexer, the MultiWave Sentry enhanced
long-distance transport system and the new MultiWave Firefly and
MultiWave Metro short-haul systems. Through it's Alta subsidiary, based
in Norcross, GA, CIENA provide a range of engineering, furnishing and
installation (EF&I) for telecommunications service providers in the
areas of transport, switching and wireless communications.
CIENA's DWDM equipment expands the carrying capacity of fiber optic
networks by dividing the optical signal into several separate optical
channels or wavelengths. An optical fiber without DWDM technology
carries a single color of laser light, or a single wavelength, on which
travels approximately 32,000 voice or data transmissions. CIENA's DWDM
technology divides the single wavelength into multiple colors, or
channels, thereby multiplying the capacity of the fiber by the number
of channels and enabling service providers to expand bandwidth without
the expensive process of adding more fibers.
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