Ciena forecasts strong growth on broadening customer base

Network equipment maker Ciena Corp forecast current-quarter revenue well above estimates and said it expected growth to continue into the second half of the year, driven by a widening customer base.

Shares of the company, which also reported better-than-expected second-quarter profit and revenue, rose as much as 18 percent in early afternoon trade.

“They have diversified into web 2.0, finance, education, healthcare and energy,” Dougherty & Company LLC analyst Catharine Trebnick said.

“They are less concentrated around two top Tier 1 carriers, so their top 10 customers now generate 60 percent of the total revenue as opposed to 65 percent a year ago,” Trebnick added.

AT&T Inc and Verizon Communications Inc are Ciena’s top carrier customers.

Ciena, which makes equipment that expands the capacity of data transfer over fiber-optic networks, forecast third-quarter revenue in the range of $585 million to $615 million, above analysts’ average expectation of $583.3 million.

The company is benefiting from U.S. telecom carriers and cable operators spending more networks to meet rising demand for faster internet connectivity, as more customers use smartphones, tablets and high-definition televisions to stream high-bandwidth data.

“Web 2.0 infrastructure-as-a-service players are driving enormous traffic growth. As we move more traffic to the cloud it requires an optical backbone to build it,” Needham & Co analyst Alex Henderson said.

AT&T’s bid for DirecTV and Comcast Corp’s proposed $45 billion takeover of Time Warner Cable Inc are indicative of the rise of web-based TV and surging mobile Internet usage.

Ciena, which transferred its listing to the New York Stock Exchange and began trading there Dec. 23, said its net loss shrank to $10.2 million, or 10 cents per share, in the second quarter ended April 30, from $27.1 million, or 27 cents per share, a year earlier.

Excluding items, the company earned 17 cents per share revenue of $560.1 million.

Analysts had expected earnings of 13 cents per share on revenue of $559.3 million.

Ciena also said a single customer accounted for 21.5 percent of total revenue during the quarter. Trebnick suggested this customer was AT&T Inc. (Reuters)

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