They say it's not easy being green, but last year it was pretty easy to be a Ciena (NASDAQ:CIEN) shareholder. For four quarters in a row, the telecom equipment maker trounced analyst earnings estimates. Tomorrow morning, it aims to start out the new year right as well. First-quarter 2007 earnings are due out before market open.

What analysts say:

  • Buy, sell, or waffle? Twenty-three analysts color Ciena's outlook. Eight say buy, 13 more hold, and two sell.
  • Revenues. On average, they're looking for 36% sales growth tomorrow, to $164.1 million.
  • Earnings. Last year's Q1 loss forgotten, Ciena is expected to report $0.23 per share in profits this time around.

What management says:
In addition to trumpeting a "return to profitability in fiscal 2006," CEO Gary Smith highlighted Ciena's "eleventh sequential quarterly increase in revenue" last quarter. He further expressed confidence that the firm will "continue improving our overall financial performance in 2007," and "deliver, on a percentage basis, low single-digit sequential revenue growth in our fiscal first quarter 2007... and... during the balance of the year."

Personally, I'm more impressed with the GAAP net profit, and the reduced rate of cash burn -- but it's still good to know what management thinks its most important metrics are. In Ciena's case, it's revenues, revenues, and revenues again. (Strange, though, that it's no longer revenues, revenues, and gross margin.)

What management does:
Actually, gross margin performance remains impressive, rising on a rolling basis in every quarter of the last year. (It's only when you look at the sequential gross margin trends that things begin to look weak.) Likewise with operating margin. And as already noted, Ciena finally achieved net profitability last quarter as well.





























All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
If you're wondering how Ciena managed to "collect $200 without passing go" last quarter -- to show a rolling net profit while its operating margins remain in the red -- then here's your answer. The company continues to sit on a sizeable cash cache, consisting of about $850 million in cash and short-term investments, and another $350 million or so in long-term investments. It's by virtue of the interest and investment income on these assets (diminished somewhat by interest payments on its debt) that Ciena finally managed to book a net profit last quarter.

In that regard, Ciena looks likely to add yet another feather to its cap with tomorrow's news. Over the last three quarters, it has booked a cumulative operating loss of $2.5 million, due entirely to the operating loss booked in fiscal Q2 2006. This means if it can book at least as much operating profit in fiscal Q1 2007 as it did in either of the last two quarters, rolling operating margin will emerge into the black in just a few short hours. At that point, interest income will become just icing on the cake -- rather than the whole cake.

What did we expect out of Ciena last quarter, and what did we get? Find out in:

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Fool contributor Rich Smith does not own shares of any company named above. The Fool has a disclosure policy.