Ciena (CIEN) on Thursday reported earnings and sales for the October quarter that slightly beat analysts’ estimates as supply chain problems eased. Management forecast fiscal 2023 revenue growth in a range of 16% to 18%, and Ciena stock soared.
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Fiscal year 2023 begins with the current quarter ending in January.
Ciena’s earnings for the fiscal fourth quarter were 61 cents a share, down 28% year over year. Revenue fell 7% to $971 million, the company said.
A year earlier, Ciena was earning 85 cents a share on sales of $1.04 billion. Analysts were expecting earnings of 8 cents a share on sales of $850 million for Ciena shares.
The Hanover, Maryland-based maker of optical communications equipment and software reported gains ahead of the market open. Ciena shares are up nearly 20% in the stock market today to close at 51.87.
“Our strong fourth quarter financial results were better than expected as we benefited from some favorable supply chain developments during the second half of the quarter,” said Chief Executive Gary Smith in the earnings release. “Looking ahead, given our substantial backlog and ongoing signs of gradual improvement in supply, we expect outsized revenue growth in fiscal 2023.”
Supply chain issues are alleviated
Heading into Ciena’s earnings report, management had cut its 2022 guidance three times amid ongoing supply chain constraints. Ciena’s production of networking gear has been slowed by component shortages.
On a positive note, Ciena had a record backlog of $4.4 billion at the end of the July quarter.
“Ciena continues to suffer from component shortages but has seen improvements,” said Simon Leopold, an analyst at Raymond James, in a report. “Ciena’s image has suffered over the prior quarters due to supply chain missteps, but its technology leadership has not been challenged. The journey ahead could have its beginnings and beginnings with ongoing supply issues and project chunks, but prospects for margin improvement and good growth remain bright.”
Ciena Stock: Revenue Forecast at Earnings Call
Ciena stock is down more than 44% so far in 2022. En route to Ciena’s earnings report, the company held a Relative Strength Rating of 36 out of a best possible 99, according to the IBD Stock Checkup.
Ciena’s equipment is integrated with telecommunications networks and Internet data centers. In addition, the company competes Infinera (INFN) and Cisco systems (CSCO).
Ciena recently made two acquisitions — Tibit and Benu — targeting the telecom market.
Ciena stock could benefit from US government political pressure on China’s Huawei in fiscal 2023, analysts say. Some countries have stopped buying Huawei network equipment due to national security concerns.
Follow Reinhard Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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