Ciena Corp. (NASDAQ:CIEN) reports fiscal third-quarter 2008 results Thursday morning. Want to know what Wall Street expects to see? Read on. Want to know what really matters? Read on a bit more.

What analysts say:

  • Buy, sell or waffle? Nineteen analysts color Ciena's outlook: 10 say to buy it, eight vote hold, and one says to sell it.
  • Revenues. On average, they're looking for 24% sales growth, to $253.6 million.
  • Earnings. Pro forma profits are expected to fall 10%, to $0.37 per share.

What management says:
CEO Gary Smith boasted last quarter about how Ciena is eating its competitors' lunch. Growth at Ciena has been "faster-than-market," he said, implying that Ciena may be taking market share from rivals like Cisco (NASDAQ:CSCO), Nortel (NYSE:NT), and Alcatel-Lucent (NYSE:ALU). Management named two companies, Embarq (NYSE:EQ) and NTELOS Holdings (NASDAQ:NTLS), as customers that have recently chosen its products. Meanwhile, Smith tells us that both operating profit margins and net income are "solid."

What management does:
The numbers back Smith up on both counts. Operating margins are going gangbusters at Ciena; the rolling net and gross margins are up nicely as well. We may not yet be at Cisco or Juniper (NASDAQ:JNPR) levels of profitability, but we're headed in the right direction.

Margins

1/07

4/07

7/07

10/07

1/08

4/08

Gross

46.2%

44.7%

45.0%

46.5%

48.1%

50.6%

Operating

1.2%

1.7%

3.5%

5.6%

6.2%

9.5%

Net

2.9%

4.9%

9.0%

10.6%

11.9%

12.5%

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:
Which is why it pains me to point out a quirk that could set Ciena back. Management warned in July that two of its investments in structured investment vehicles are continuing to head south. They've already cost Ciena $13 million; this quarter, they'll lop another $5 million or $6 million off of profits. (Call it a nickel per share.) It doesn't look to me, though, like Wall Street has factored these investment losses into its estimates -- which are, after all, pro forma in nature.

Investors may suffer a nasty surprise when they read the GAAP numbers on Thursday.

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

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