Ciena (CIEN) is down 8.5% after the company missed first quarter estimates this morning.
Revenue came in at the low end of guidance and below consensus, up 8% year-over-year to $621.5 million versus $615-645 million guidance. Ciena shut down shipping while it upgraded its ERP system during the quarter. This took longer than expected and impacted sales.
As a result, earnings also missed estimates despite gross margin of 44.9%, in-line with mid-40% guidance.
Second quarter revenue guidance of $680-710 million was in-line with estimates. The company also reaffirmed fiscal 2018 guidance calling for revenue growth above the mid-single digit rate at which its market is growing with an adjusted gross margin in the mid-40%.
On the call, Ciena said that fundamental demand drivers continue to strengthen. First quarter orders and shipments were a record while the backlog hit a new high.
North American sales grew 3% or 14% absent AT&T (T), driven by strength with web-scale customers and Tier 1 service providers. North American sales will grow this year despite AT&T sales being flat to down. Ciena has a large response in India, which is seeing broad based growth.
Even though it is still pretty far out, Ciena said people are beginning to think about 5G. Ciena said it is extremely well positioned for growth in demand for 5G capacity.
CIEN is testing support near the $24 level this morning after falling through its 50-day moving averages.
Ciena has a ~$3.4 billion market capitalization and trades at ~14x adjusted fiscal 2017 earnings estimates.