» Ciena Shares Plummet on Lower-Than-Expected Revenue OutlookTelecommunications Industry News

Telecom News Editorials Reports Glossary

Ciena Shares Plummet on Lower-Than-Expected Revenue Outlook

5:15 am on September 5, 2008 | Category: Business, Internet, VoIP

U.S. networking equipment maker, Ciena Corp., drastically slashed its revenue outlook yesterday, explaining that communications carriers were being cautious with their purchases due to ongoing economic uncertainty.

The company, which reported a 59% decline in last quarter’s profits, expects to generate sales of $190 million to $210 million in the current fiscal quarter, well below analysts expectations, which averaged $264 million, according to Reuters Estimates. This news caused Ciena’s stock to plummet 24.9% yesterday on the NASDAQ.

Many telephone service providers have been cutting back on capital spending over the past few months, causing Ciena — which sells optical switches and IP networking technology to carriers like AT&T, Verizon, and Sprint Nextel — to feel the pinch, according to CEO, Gary Smith.

“The macroeconomic environment gives them a pause for thought, for greater capex scrutiny,” Smith said in a telephone interview, noting that carriers were not outright canceling projects or orders but taking more time to make purchase decisions. “I think they’re just being prudent and reflective of the concerns in the global macroeconomic world.”

Telecommunications Industry News