01—Abstract
Summary
Summary of the 10-K filed December 19, 2014. Cited figures are marked; the original filing is the authoritative source.
Ciena Corporation (CIEN) reported a revenue of $2.3 billiona for fiscal year 2014, an increase of 9.9% compared to the previous year.
The company, a network specialist providing communications networking solutions, saw strong growth in its Converged Packet Optical segment, driven by demand for high-capacity transport from service providers and Web-scale customers. However, the Optical Transport segment experienced a significant decline due to the industry's transition to next-generation architectures. The company's strategy focuses on its OPn Architecture, emphasizing software-programmability, and investing in R&D for higher transmission speeds and virtualized network functions.
Despite revenue growth, Ciena faced challenges including increased operating expenses and a challenging competitive landscape requiring concessions. A notable event was Ciena's selection as a participating vendor in AT&T's Domain 2.0 supplier program, which impacted Q4 2014 revenue and gross margin. The company ended fiscal year 2014 with a net loss but showed improvement in cash from operations.
02—Key points
Key Highlights
- Revenue increased by 9.9% year-over-year to $2.3 billion in fiscal year 2014.
- The Converged Packet Optical segment saw a significant 22.6% revenue increase, indicating strong demand for high-capacity solutions.
- The Optical Transport segment experienced a substantial 45.6% decline in revenue as customers shift to newer network architectures.
- Ciena's net loss improved to $40.6 million in FY2014 from $85.4 million in FY2013, though still representing a net loss.
- Operating expenses increased by 4.1% to $902.6 million, driven by R&D and S&M investments.
- The company's cash position improved, with cash and cash equivalents totaling $586.7 million at year-end.
- Ciena was selected as a vendor for AT&T's Domain 2.0 program, impacting Q4 2014 financials but positioning the company for future cloud-based architecture transitions.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2014, Ciena Corp lost $0.02.
- Revenue$2.29B100.0%
- Cost of revenue−$1.34B58.6%
- Gross profit$948.4M41.4%
- Operating costs−$902.6M39.4%
- Operating income$45.7M2.0%
- Interest, other & tax−$86.3M3.8%
- Net income−$40.6M1.8%
Where FY2014 revenue went
$2.29B- Cost of revenue: $1.34B, 59% of revenue
- Other operating costs: $501.5M, 22% of revenue
- R&D: $401.2M, 18% of revenue
- Operating income: $45.7M, 2.0% of revenue
Kept 2.0% as operating incomeOperating income $45.7M · 2.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2014filed December 19, 2014Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $2.29B$2.08B | +9.9% |
| Cost of Revenue | $1.34B$1.22B | +10.1% |
| Gross Profit | $948.35M$865.17M | +9.6% |
| R&D Expenses | $401.18M$383.41M | +4.6% |
| Operating Expenses | $902.65M$866.95M | +4.1% |
| Operating Income | $45.70M-$1.77M | +2674.9% |
| Interest Expense | $47.12M$44.04M | +7.0% |
| Net Income | -$40.64M-$85.43M | +52.4% |
| EPS (Basic) | $-0.38$-0.83 | +54.2% |
| EPS (Diluted) | $-0.38$-0.83 | +54.2% |
| Shares Outstanding (Basic) | 105.78M102.35M | +3.4% |
| Shares Outstanding (Diluted) | 105.78M102.35M | +3.4% |
05—Questions
Frequently Asked Questions
What was Ciena's overall financial performance in FY2014?
Ciena reported revenue of $2.3 billion in fiscal year 2014, an increase of 9.9% from the prior year. While revenue grew, the company incurred a net loss of $40.6 million, an improvement from the $85.4 million net loss in fiscal year 2013. The company generated positive cash flow from operations.
Which business segments performed well, and which faced challenges?
The Converged Packet Optical segment was a strong performer, with revenue increasing by 22.6% due to demand for high-capacity optical transport. Conversely, the Optical Transport segment saw a significant revenue decline of 45.6% as customers shifted away from older technologies. The Packet Networking segment showed modest growth, while Software and Services also saw an increase in revenue.
What are the key strategic initiatives Ciena is pursuing?
Ciena's strategy revolves around its OPn Architecture, which focuses on software-programmable networks. The company is investing in R&D to enhance its solutions, aiming for higher transmission speeds (e.g., 200G, 400G, 1 Terabit) and capabilities in areas like network function virtualization (NFV) and software-defined networking (SDN). They are also focused on diversifying their customer base beyond traditional service providers to include Web-scale providers and expanding their geographic reach.
What impact did the AT&T Domain 2.0 program have on Ciena's financials?
Ciena was selected as a participating vendor in AT&T's Domain 2.0 supplier program, which aims to transition AT&T to cloud-based architectures embracing NFV and SDN. This commercial arrangement negatively impacted Ciena's revenue and gross margin in the fourth quarter of fiscal year 2014. The company expects a proportionally lesser impact in subsequent quarters.
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