How Ciena Earnings Could Beat Juniper Networks and Cisco Systems

Ciena (NYSE: CIEN  ) will release its quarterly report on Thursday, and investors are looking forward to seeing further positive signs of the optical-networking company's rebound in its results. Even as broader-based networking companies Cisco Systems (NASDAQ: CSCO  ) and Juniper Networks (NYSE: JNPR  ) have faced their own struggles, Ciena has managed to reverse year-ago losses in recent quarters, and hopes to keep doing so this quarter.

Ciena's products help enterprise customers speed up their network infrastructure, helping to manage what has recently become an increasingly massive volume of data gathered from data-analytics exercises and other applications. As Ciena's customers have shown signs of ramping up on their spending in the IT arena, it hopes that it can outpace Cisco and Juniper to take advantage of its narrower focus to get more than its proportionate share of great capital expenditures. Let's take an early look at what's been happening with Ciena over the past quarter and what we're likely to see in its report.

Stats on Ciena

Analyst EPS Estimate

$0.24

Year-Ago EPS

($0.07)

Revenue Estimate

$568.51 million

Change From Year-Ago Revenue

22%

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

What's next for Ciena earnings?
In recent months, analysts have been guardedly optimistic on their views for Ciena earnings, raising their full-year estimates for the current fiscal year by $0.01 per share. The stock, however, has pulled back slightly, falling 4% since early September.

Ciena started off the quarter well, reporting better revenue and net income than investors had expected to see in its July quarter. CEO Gary Smith pointed directly to its specialization as a big driver of its results, as it managed to avoid the broader challenges that have held back Juniper, Cisco, and other larger companies from achieving the same growth rates. In particular, with wireless network giants AT&T (NYSE: T  ) and Verizon (NYSE: VZ  ) looking to ramp up on their spending to fill out their geographical footprints and provide wider coverage, Ciena expects to see even more growth in the future. Verizon has largely built out its LTE network, but it will still have to spend money to improve efficiency and make coverage denser. Meanwhile, AT&T is still behind in its LTE rollout, and will have to keep adding markets to provide customers with the coverage they want. Ciena should benefit from both of these companies' moves.

Ciena is looking to realize its growth potential in all corners of the globe. Although AT&T and Verizon are major customers, Ciena also won business from customers in other parts of the world, including Europe, Brazil, and India. Ciena's international scope lets it win business in regions at various stages of technological development, letting it use expertise and know-how it built in first-mover countries and apply it more adeptly as other countries catch up and start using similar technology.

Yet many investors have made the mistake of lumping Ciena in with its larger rivals and their own challenges. In particular, Cisco has said that it expects its sales to decline in the current quarter, leading some to assume that telecom spending has fallen more than investors had expected. Yet even as shareholders pulled down Juniper and Ciena share prices in concert with Cisco's woes, there's reason to believe that Cisco's problems are company-specific, raising hope that Ciena will escape the slower trends that Cisco has seen.

In the Ciena earnings report, watch closely to see where the networking company's biggest revenue sources are. If the telecom industry comes through with expected spending boosts, then it should put to rest the Cisco-led fears for Ciena and produce more enthusiasm for the stock going forward.

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