Ciena’s stock took a nosedive after the company revised its full-year guidance due to challenges caused by high inventory levels at telecom service providers.
Industry-wide Impact
Similar issues are impacting other key players in the sector, including Cisco Systems and Hewlett Packard Enterprise.
The company’s shares dropped by 14.9% to $52.75 during recent trading on Thursday.
Financial Performance
In the fiscal first quarter ending Jan. 27, Ciena reported revenue of $1.04 billion, marking a 1.8% decline from the previous year. This figure fell within the company’s projected range of $980 million to $1.06 billion and surpassed Wall Street’s consensus of $1.02 billion. Adjusted earnings stood at 66 cents per share, outperforming the Street estimate of 48 cents. Under GAAP principles, earnings stood at 34 cents per share.
CEO Perspective
Regarding the challenges faced, CEO Gary Smith stated, “While we remain very confident in the strength and durability of bandwidth demand as a long-term driver of our business, it is taking longer than expected for service providers to work through high levels of inventory.”
Looking ahead to the April quarter, Ciena anticipates revenue between $850 million and $930 million, falling significantly below Wall Street’s expectation of $1.1 billion.
For the full fiscal year ending October 2024, the company now projects revenue in the range of $4 billion to $4.3 billion, a decrease from the initial forecast that had targeted $4.5 billion at the midpoint. Additionally, full-year gross margin is expected to be in the low 40% range compared to the prior mid-40s estimate.
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