Ciena (CIEN) is set to report Q2 (Apr) results tomorrow before the open at 7am ET with a call to follow at 8:30am ET.
- The CapitalIQ consensus for Q2 (Apr) non-GAAP EPS is $0.41 and for revenue it's $818.2 mln (March 5 guidance: $800-830 mln).
- Of note, Ciena typically guides for revenue for the next quarter on the call.
- In terms of performance relative to consensus, CIEN has reported EPS upside in each of the past three quarters although the size of the beats have been declining from $0.12 to just $0.03 in Q1 (Jan). Ciena consistently reports revenue upside. Any downside deviation from this would be a negative.
- A big topic for Ciena will be whether it's benefitting from rival's Huawei's troubles with the US government. In May, component suppliers like LITE and ACIA announced they would comply with the Trump Administration's export restrictions on component sales to Huawei Tech. Is Ciena gaining market share? Is it negotiating better component prices?
- The competitive landscape generally is always a key topic as well. Ciena says it has been taking additional market share. Some smaller vendors are struggling and seeing technology lags. Network operators are doing a flight to quality to vendors like Ciena.
- Another key topic with Ciena is that while it primarily sells to telcos, it has been making it a priority to broaden into other areas. In fact, about 37% of revenue now is outside of telco. The largest component of that are the web-scale customers, which includes internet content providers and data center operators, focused on applications such as search, social media, video etc. Web-scale customers include Google, Facebook, Amazon etc.
- On the last call, Ciena threw investors a bit of a curve ball, saying that it expects its web-scale growth to moderate a bit in 2019 relative to 2018. This push into non-telco areas, especially Web-scale, is a big reason investors have liked the stock. So this is a topic we'll want some clarity on. Also, we'll be anxious for Ciena's view on the 5G rollout in its industry.