Ciena (CIEN) shares are on the rise, apparently due to a positive investor reaction to the presentations at the company’s analyst meeting this morning in New York.
The meeting focused in particular on the company’s integration of Nortel’s metro ethernet networking business, which it agreed to acquire late last year for $769 million.
At the event, CFO Jim Moylan declined to provide specific quarterly guidance. But he did lay out an operating model for the company upon completion of integration of the former Nortel unit that is being well received:
- Moylan said the company believes it can grow revenues 10%-12%, at least matching the growth rate of the broader optical telecom equipment market.
- He says gross margin should be in the low-to-mid 40s, starting at the bottom of the range and working higher over time.
- Operating expenses as a percentage of revenue are expected to be in the low-to-mid 30s.
- Operating margin is expected to be 7%-10%, with the company reaching that level by the end of FY 2011. (He was careful to say that the company would not reach that level for all of 2011, but should be operating there by year end.)
In a research report yesterday, UBS analyst Nikos Theodosopoulos wrote that investors appeared to be expecting combined operating margins for the company of 6%-8%.
Also today, AT&T officially named Ciena as a “domain supplier for optical and transport equipment.” Light Reading notes the news is no surprise, and that the Street has been expecting this for months.
CIEN today is up 92 cents, or 5.3%, to $18.26.
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