Ciena relies on LTE, NBNs to turn profit

Broadband projects and LTE-ready mobile backhaul in Asia will drive loss-making Ciena into the black, predicts CEO Gary Smith.
Fresh off of completing its first full financial quarter since integrating Nortel’s Metro Ethernet Networks (MEN) business into its portfolio in March, Ciena is looking to expand its international business, which currently accounts for just over 40% of its revenue, Smith told in an interview Thursday.
Smith said Asia and Latin America were the two hottest growth segments for Ciena – now positioned as an “exclusive optical-Ethernet convergence” play – as more markets look to beef up their overall broadband infrastructure.
“Look at the bandwidth growth going on in terms of mobile backhaul as operators shift to LTE, and the focus on broadband growth in markets like Australia and New Zealand,” Smith said.
“That has a knock-on effect with the kind of infrastructure platforms that we’re interested in, so really, we see the convergence of optical and Ethernet as the strongest growth area in Asia,” he said.
Ciena isn’t the only vendor chasing that space, of course – so are most of its infrastructure rivals. Smith says one key to winning that segment will be network intelligence.
“The primary challenge operators have is mining economic value out of the bandwidth growth and monetizing that traffic,” he said.
Smith said the company was recruiting new people and plans to expand its presence and sales operations, and R&D.
Ciena’s post-MEN financial performance has received mixed reviews from analysts. Fiscal Q3 revenues ending July 31 totaled almost $390 million (€296 million) – well over half of it generated by the inherited Nortel MEN business – compared to $164.7 million year on year.
But Ciena is still in the red with a net loss of almost $110 million, compared to $26.4 million year on year, although Smith pointed out that the adjusted non-GAAP net loss for Q3 was just $8 million, compared to $11.7 million in the previous quarter.
Ciena is also projecting 5% revenue growth for Q4, which Smith says isn’t all that modest “given the fact that we just put these two businesses together, so to be able to put that kind of growth in place is a great testament to the strategic fit.”