Ciena (CIEN) is down 4% after the company missed fourth quarter earnings estimates and gave long-term guidance this morning.
Ciena reported fourth quarter adjusted EPS of $0.46, just below estimates, excluding $1.1 billion gain from the reversal of a deferred tax asset valuation allowance. Revenue was up 4% year-over-year to $744 million versus $720-750 million guidance. Adjusted gross margin came in at 44.6% versus mid-40% guidance. The company said government and regional service provider business bounced back a bit in the fourth quarter after being cited as a weak point three months ago.
Ciena guided for first quarter revenue in-line with estimates and said gross margins would be at the low end of the recent range (low to mid-40%) in the coming quarters as the company goes after more market share. New business sees higher costs off the bat. Management said this is a positive overall and the pricing environment hasn't changed.
The company also gave long-term financial targets, noting that visibility is as high as it's ever been. The company said that annual revenue will grow 5-7% on average over the next three years, with adjusted EPS growing 14-16%, targeting a 15% adjusted operating margin.
Management addded that top-line growth would be at the low end of the range in fiscal 2018. Wall Street estimates were just below the company range. The company said that optical growth has slowed to the low single digits but it continues to take market share.