10-QPeriod: Q3 FY2003

CIENA CORP Quarterly Report for Q3 Ended Jul 31, 2003

Filed August 21, 2003For Securities:CIEN

Summary

Ciena Corporation (CIEN) reported its quarterly results for the period ending July 31, 2003. While revenue showed a significant year-over-year increase for the quarter, driven by product sales, the company continued to incur substantial net losses. The nine-month period showed a considerable decrease in revenue compared to the previous year, primarily due to reduced demand for certain product lines. The company is actively managing its cost structure, with ongoing restructuring efforts aimed at further reducing operating expenses. Ciena also completed the acquisition of WaveSmith Networks, Inc. during the period and announced an agreement to acquire Akara Corporation. Despite the ongoing challenges in the telecommunications industry, Ciena maintains a strong liquidity position with significant cash and investments.

Key Highlights

  • 1Revenue for the third quarter of fiscal year 2003 increased by 36.9% to $68.5 million compared to $50.0 million in the same quarter of fiscal year 2002.
  • 2Despite revenue growth in the quarter, the company reported a net loss of $88.9 million for the three months ended July 31, 2003, compared to a net loss of $160.0 million in the prior year's quarter.
  • 3For the nine months ended July 31, 2003, total revenue decreased by 29.0% to $212.5 million, down from $299.2 million in the same period of fiscal year 2002.
  • 4The company completed the acquisition of WaveSmith Networks, Inc. on June 16, 2003, for an aggregate purchase price of $156.3 million.
  • 5Ciena announced an agreement to acquire Akara Corporation on August 21, 2003, for an aggregate consideration of $45 million in cash and stock.
  • 6The company continued its cost reduction efforts, with operating expenses (R&D, S&M, G&A) decreasing year-over-year for both the quarter and the nine-month period.
  • 7Ciena reported a significant valuation allowance against its deferred tax assets of $835.3 million as of July 31, 2003, indicating uncertainty regarding future profitability.

Frequently Asked Questions

For the quarter ended July 31, 2003, Ciena reported increased revenue of $68.5 million compared to $50.0 million in the prior year's quarter. However, the company continued to experience a net loss, reporting $88.9 million for the quarter, an improvement from the $160.0 million net loss in the same period last year. This indicates revenue growth but persistent operational losses.

The nine-month period ending July 31, 2003, showed a significant decline in revenue, down 29.0% to $212.5 million from $299.2 million in the prior year. This is attributed to reduced demand for specific product lines, such as long-distance transport and intelligent core switching products, despite an increase in the number of customers served.

Ciena completed the acquisition of WaveSmith Networks, Inc. in June 2003. More recently, on August 21, 2003, the company announced an agreement to acquire Akara Corporation. These acquisitions are part of Ciena's strategy to expand its product offerings and addressable market, particularly in areas like multi-service switching and storage extension solutions.

Ciena maintained a strong liquidity position as of July 31, 2003, with cash and cash equivalents totaling $585.3 million, short-term investments of $727.1 million, and long-term investments of $437.1 million. Cash used in operations for the nine months was $174.7 million, a negative trend compared to the $67.1 million generated in the prior year's period.