10-QPeriod: Q1 FY2013

CIENA CORP Quarterly Report for Q1 Ended Jan 31, 2013

Filed March 13, 2013For Securities:CIEN

Summary

Ciena Corporation (CIEN) reported its financial results for the quarter ended January 31, 2013. The company experienced a year-over-year increase in total revenue, driven primarily by strong performance in its Converged Packet Optical and Software and Services segments, which offset a significant decline in the Optical Transport segment. Despite revenue growth, Ciena continued to report a net loss, although the net loss per share showed a slight improvement compared to the prior year period. The company also executed a debt exchange, issuing new notes due in 2020 in exchange for existing notes due in 2015, which strengthened its balance sheet by extending maturity. Ciena's liquidity remains solid, with a substantial amount of cash and cash equivalents on hand. Management continues to focus on evolving its product portfolio towards next-generation network architectures and improving operational efficiencies.

Financial Highlights

50 data points
Beta

Revenue

$453.09M

43.2% Gross Margin

Net Income

-$47.32M

-10.4% Net Margin

EPS (Diluted)

$-0.47

Total Assets

$1.89B

Cash & Equivalents

$552.27M

Free Cash Flow

-$57.97M

Financial Statements
Beta
Revenue$453.09M
Cost of Revenue$257.30M
Gross Profit$195.79M
R&D Expenses$89.13M
Operating Expenses$201.40M
Operating Income-$5.61M
Interest Expense$10.73M
Net Income-$47.32M
EPS (Basic)$-0.47
EPS (Diluted)$-0.47
Shares Outstanding (Basic)101.20M
Shares Outstanding (Diluted)101.20M

Key Highlights

  • 1Total revenue increased by 8.7% year-over-year to $453.1 million.
  • 2Converged Packet Optical segment revenue grew by 18.8% and Packet Networking segment revenue surged by 113.2% year-over-year.
  • 3Optical Transport segment revenue declined significantly by 46.5% year-over-year.
  • 4Net loss was $47.3 million, a slight improvement from $47.7 million in the prior year quarter.
  • 5Basic and diluted net loss per share improved to $(0.47) from $(0.49) in the prior year quarter.
  • 6Ciena completed a debt exchange, issuing $187.5 million in 4.0% Convertible Senior Notes due 2020 in exchange for existing notes due 2015, resulting in a $28.6 million loss on extinguishment of debt.
  • 7The company maintained a strong cash position with $552.3 million in cash and cash equivalents at the end of the quarter.

Frequently Asked Questions

Revenue growth was primarily driven by strong performance in the Converged Packet Optical segment, up 18.8%, and an exceptional surge in the Packet Networking segment, up 113.2%. These increases were partially offset by a significant 46.5% decline in the Optical Transport segment, indicating a strategic shift in customer demand towards next-generation converged architectures.

While Ciena reported a net loss of $47.3 million, the net loss per share improved slightly to $(0.47) from $(0.49) in the prior year. This was achieved through a combination of improved gross margins (43.2% vs. 40.3%) driven by a better product mix and operational efficiencies, and a slight decrease in total operating expenses. However, a substantial loss on extinguishment of debt ($28.6 million) also impacted the net loss for the quarter.

Ciena exchanged $187.5 million of its 2015 notes for new 4.0% Convertible Senior Notes due 2020. This transaction extended the company's debt maturity profile, enhancing its financial flexibility and strengthening its balance sheet. It did result in a non-cash loss on extinguishment of debt, which impacted the quarter's net loss.

Ciena maintains a strong liquidity position, with $552.3 million in cash and cash equivalents and an additional $84.9 million in short-term investments as of January 31, 2013. The company expects these resources to be sufficient to meet its working capital needs, capital expenditures, and other liquidity requirements for at least the next 12 months.