Network gear maker Ciena rides on raised carrier spending

Reuters News
Posted: Sep 04, 2013 7:13 AM
Network gear maker Ciena rides on raised carrier spending

(Reuters) - Network equipment maker Ciena Corp <CIEN.O> forecast strong revenue for the current quarter as it gains from a recovery in spending by telecom carriers, its biggest customers.

Ciena shares jumped 11 percent in premarket trading on the outlook and better-than-expected results.

The company, whose biggest customer last year was AT&T Inc <T.N>, forecast fourth-quarter revenue of $550 million to $580 million. Analysts on average were expecting $551.4 million, according to Thomson Reuters I/B/E/S.

Major U.S. telecom companies are upgrading their wireless and wireline networks, creating a big demand for network gear made by Ciena and rivals such as Juniper Networks Inc <JNPR.N>.

AT&T said in November it would boost capital spending by 16 percent to $22 billion a year for the next three years. Verizon Communications Inc <VZ.N>, also one of Ciena's top customers, boosted its capital spending budget in July.

Ciena's net loss narrowed to $1.2 million, or 1 cent per share, in the third quarter, helped by lower costs. Gross margin rose to 42.4 percent from 38.2 percent.

Revenue rose 14 percent to $538.4 million.

Excluding items, the company posted a profit of 23 cents per share. Analysts on average had expected earnings of 16 cents on revenue of $533.5 million.

Shares of the company, which makes equipment that expands the capacity of data transfer over fiber-optic networks, were trading at $22.88 in premarket trading on Wednesday.

(Reporting by Neha Alawadhi in Bangalore; Editing by Joyjeet Das and Saumyadeb Chakrabarty)