Ciena Earnings -2: 3Q Table of Financial Data
-- September 14, 1998
Ciena Corp.
3rd Quar July 31:
1998 1997
Revenue $129,116,000 $121,845,000
Net income a 2,089,000 35,724,000
Avg shrs (basic) 102,089,000 98,021,000
Avg shrs (diluted) 108,215,000 106,296,000
Shr earns (basic)
Net income a .02 .36
Shr earns (diluted)
Net income a .02 .34
9 Months:
Revenue 416,926,000 283,121,000
Net income b 57,092,000 b 78,059,000
Avg shrs (basic) 101,360,000 68,010,000
Avg shrs (diluted) 107,775,000 103,705,000
Shr earns (basic)
Net income b .56 b 1.15
Shr earns (diluted)
Net income b .53 b .75
a. Net income was $16.1 million, or 15 cents a share, exclusive of
one-time charges associated with Ciena's settlement with Pirelli and
costs related to the proposed merger with Tellabs..
b. Net income was $86.8 million, or 78 cents a share, compared with
net income of $81.1 million, or 78 cents a share, in 1997, excluding
the effect of one-time charges for purchased research and development
and merger costs in 1998 and additional expense accruals pertaining
to the company's litigation with Pirelli in 1997 and 1998.
Ciena Corp. (CIEN) said its gross margins during the quarter were
hurt by lower-than-expected overall volume and the combination of
price concessions to a strategic customer in return for higher volume
commitments.
The company is adjusting its long-term gross margin target model
range to 45% to 50%, in light of evidence that its competitors are
heavily discounting their prices in an attempt to gain market
presence.
It is likely that unabsorbed manufacturing overhead will pull gross
margins below the target model short-term because of the company
growing its manufacturing infrastructure to accommodate a higher
level of business than it realizes in the near-term.
Ciena believes fourth quarter revenues and operating results will be
"materially below" those reported in the third quarter.
In addition, while visibility is limited beyond the next quarter, the
company said it is currently resetting its fiscal 1999 business model
at a level that anticipates modest growth in year-over-year revenues
and net income.
Six analysts surveyed by First Call expect the company's fourth
quarter earnings to be 27 cents a share.
In the fourth quarter of 1997, the company reported earnings of $37.3
million, or 35 cents a share, on revenues of $121 million.
Ciena said the recent uncertainty about Tellabs and the attempts by
its competitors to capitalize on that uncertainty may delay or alter
some customers' near-term purchase decisions.
The company also lost expected incremental business at its DTI unit.
Going forward, the company plans to restore shareholder value by
continuing its "proven" record of rapid product introduction and
technology innovation that enables its customers to simplify their
networks and lower the cost of bandwidth.
The company also plans to drive down costs in its products to help it
achieve and maintain solid margins and to bolster sales and marketing
efforts.
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