Cost cuts help Ciena’s bottom line

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Higher revenues and continued cost cutting helped Ciena, the US communications equipment manufacturer, report improved margins and a smaller loss its fiscal fourth-quarter.

Ciena’s net loss narrowed to $252.9m, or 44 cents a share, from $495.1m, or 87 cents, a year earlier as sales in the quarter ended October 31 grew by 44 per cent to $118.2m. The Linthicum, Maryland-based company cut jobs, closed offices and sold more higher-margin equipment during the quarter continuing its steady recovery.

Excluding stock options, restructuring and a $176.6m non-cash charge to cover goodwill impairment, the company reported a loss of 2 cents a share. Gross margins widened to almost 40 per cent from 29 per cent a year ago boosted by growing orders for broadband DSL (digital subscriber line) equipment, according to Gary Smith, chief executive.

Mr Smith said he expects gross margins to continue tp improve over the course of the new fiscal year. Ciena’s customers include most of the large US telecommunications groups which have been aggressively signing up new DSL customers in an effort to head off the threat posed by cable-based Internet telephony services.

“Provided we execute on plan, we believe we are well positioned to achieve profitability on an as-adjusted basis during a quarter prior to the end of fiscal 2006,” Mr Smith said. That would be Ciena’s first quarterly profit since 2001 before the technology and telecommunications bubble burst.

In the current fiscal first-quarter the company expects to report a loss, excluding one-time items, of 2 cents to 4 cents per share on flat to slightly higher revenue.

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