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Ciena posts loss despite revenue hike

Communications equipment maker Ciena Corp. said Thursday revenue jumped 7 percent in its fiscal fourth quarter, but that was not enough to keep the company from posting a loss of $80.3 million.

Despite the news, the Linthicum-based company’s shares gained more than 15 percent Thursday.

For the quarter ending Oct. 31, Ciena reported revenue of $417.6 million, compared to $389.7 million in the third quarter. The biggest driver of revenue was the acquisition of Metro Ethernet Networks business of Nortel, which accounted for $255.6 of the $417.6 million reported for the quarter. Analysts had been expecting revenue of $405.3 million. In the fourth quarter of last year, without Nortel’s unit, Ciena had revenue of $176.3 million.

“In acquiring the Nortel MEN assets, we took a bold strategic move that significantly improved the market position of the company,” said Gary Smith, president and CEO of Ciena, on a conference call with analysts on Thursday.

The company reported year-to-date revenue of $1.23 billion, compared to $652.6 million for fiscal 2009.

Despite the boost in revenue, Ciena posted a loss of $80.3 million, or 86 cents per common share. It is the ninth quarter in a row the company posted a quarterly loss. In the corresponding quarter of 2009, the company recorded a loss of $26.7 million, or 29 cents per common share.

Without one-time charges, Ciena’s loss was 18 cents per share, compared with 12 cents per share a year ago. Analysts were expecting a loss of 15 cents a share.

“Looking at how we performed during the fourth quarter, overall we’re pleased with our progress, particularly given that it is only the second full quarter of the combined business following the acquisition of the Nortel MEN assets,” Smith said.

For fiscal 2010, Ciena had a net loss of $333.5 million, or $3.58 per common share.

Management remains optimistic about the coming year. For the next quarter, Ciena projected that revenue would be between $410 million to $430 million. Analysts expect $414.4 million.

Factors like growing demand for broadband bandwidth triggered by the popularity of streaming entertainment as with Netflix was seen a potential driver for revenue in coming quarters. The company also pointed out that its customer base has become more diverse with only one company accounting for 15 percent of sales. Ciena also said non-U.S. customers contributed 50 percent of total revenue.

“We believe everything is moving in the right direction,” Ciena Chief Financial Officer James E. Moylan Jr. said.

News of the earnings drove shares of Ciena up $2.44, or 15.3 percent, to close at $18.36.

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