The optical networking hardware company Ciena posted quarterly results Monday that were in line with revised guidance issued last month, as supply-chain issues hamper production in the near-term.
But shares of Ciena (ticker: CIEN) were headed lower in morning trading— down 6.5%, to $61.65—as the company projects ongoing gross margin pressure as costs rise.
For the fiscal first quarter ended Jan. 29, Ciena posted revenue of $844.5 million, up 11.5% from a year ago, and in line with the company’s Feb. 15 announcement that revenue would be between $840 million and $850 million, down from its original guidance range of $870 million to $910 million.
In last month’s announcement, Ciena said it saw “several specific disruptions in the supply chain late in the quarter that exacerbated an already-challenging macro supply situation, which reduced our flexibility to fully mitigate these additional disruptions in the quarter.”
Adjusted profits were 47 cents a share, two pennies head of the Wall Street consensus. Under generally accepted accounting principles, the company earned 29 cents a share. Adjusted gross margin slipped to 46.2.%, from 48% a year ago, while adjusted operating margin fell to 11.8%, from 14.6%, reflecting a 14.6% increase in operating expense on an adjusted basis.
Ciena also said it repurchased $250 million of its stock in the quarter under a $1 billion buyback plan announced one quarter earlier.
In its guidance announcement, Ciena had said it still sees revenue for the fiscal year ending in October growing 11% to 13%. The company reinforced the point in the earnings announcement.
“We expect our strategic investments to drive a significant increase in supply chain capacity in the second half, and therefore remain confident in our ability to address demand and achieve the strong revenue growth we expect for the fiscal year,” CEO Gary Smith said in a statement.
Nonetheless, the Street is disappointed with guidance. For the second quarter, Ciena is projecting revenue of $930 million to $970 million, at the midpoint a little shy of consensus at $960.9 million, with adjusted gross margin declining to 42% to 44%. The company sees full year adjusted gross margin in the 43% to 46% range, which is down from the 47.9% reported for fiscal 2021.
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