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Posted by Stephen Hardy

Ciena announced unaudited results for fiscal second quarter 2009 today. Not surprisingly, the company reported down revenue; what was perhaps unexpected was a whopping GAAP net loss of $503.2 million, most of which was a non-cash charge of $455.7 million for impairment of goodwill.

The magnitude of the loss may have obscured the somewhat hopeful note of the commentary:

"Our fiscal second quarter was particularly challenging, reflecting the difficult macro and industry environment and continued delays in customer spending," said Gary Smith, Ciena's CEO and president. "While recent service providers' public commentary about expected annual capital expenditures has given the industry reason to be more optimistic about the second half of the year, our customers continue to spend cautiously, and as a result, our visibility remains limited. However, based on our direct conversations with customers and supported by trends we are seeing currently in the business, including recently improved order flow, we expect to deliver sequential revenue growth in our fiscal third quarter."

The question, of course, is whether that rebound will occur and will it be significant. Simon Leopold, communications equipment analyst at Morgan Keegan & Co., still thinks Ciena is a good bet. "We maintain our Outperform rating on Ciena," he wrote in a note issued today. "Despite the poor April quarter, good sequential improvement leaves us optimistic. Challenging visibility remains, but sequential improvement, a new product cycle, net cash per share near $3 and a CY10 EV to sales of 1.0x suggests the stock has upside potential. One could argue for a fair value near $15 based on an EV/Sales ratio of 1.5x."



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The Lightwave editorial staff uses The Lightwave Blog to share their thoughts on optical communications and whatever else might be the current topic of conversation from cubicle to cubicle. Feel free to add your own opinions.

Stephen Hardy is editorial director and associate publisher of Lightwave, which makes him responsible for the editorial aspects of the Lightwave franchise. A technology journalist since 1982, he once had his job duties described as "gets paid to tick off advertisers ".

Meghan Fuller is senior editor of Lightwave. She has degrees from Franklin & Marshall College in Lancaster, PA, and the University of Delaware and is a card-carrying member of Red Sox Nation.