UPDATE 3-Ciena trims loss, says telco spending recovering

* Loss excluding items $0.13 vs loss estimate $0.26

* Revenue $253.5 mln vs Street’s $268.3 mln

* CEO: Customer spending recovering but Europe a challenge

* Says Nortel unit integration going as planned

* Shares up 7 pct on Nasdaq
(Adds analyst and CEO comments, updates share move)

NEW YORK, June 9 (BestGrowthStock) – Communications equipment maker
Ciena Corp (CIEN.O: ) reported a lower-than-expected quarterly
loss, after phone companies resumed spending to upgrade their
networks as the economy improved.

Shares in Ciena rose 7 percent in early Wednesday trading
after the company, which supplies optical switches and other
equipment to AT&T Inc (T.N: ) and Verizon Communications Inc
(VZ.N: ), also said the integration of a Nortel unit it bought
earlier this year was going as planned.

Analysts said the comments soothed a variety of investors’
concerns, including the pace of the integration as well as
troubles in Europe.

“The stock had been down a bit recently on worries that
they were going to say something like Europe was falling off a
cliff, that the weakness was going to spread to North America
and AT&T would cut capex,” said Michael Genovese at Soleil
Securities.

“There were all these things that you could be worried
about going into it, and none of those turned out to be.”

AT&T and other phone companies cut back on network spending
last year to cope with a weak economy, but many have recently
invested more to handle increasing mobile phone and Internet
traffic.

“We see a good overall recovery, particularly in North
America,” Chief Executive Gary Smith told investors. But he
noted challenges in Europe meant overall recovery would not be
dramatic. “I think it’s going to be good steady growth,” he
added.

Analysts have said Ciena is likely to benefit from AT&T’s
investment in its wireless backhaul system. Smith declined to
comment on specifics except to say the company was “incredibly
well positioned.”

Revenue in the three months ended April 30 was $253.5
million, including $53.5 million from the Nortel unit, compared
to $144.2 million a year earlier.

That was lower than the average Wall Street forecast of
$268.3 million, according to Thomson Reuters I/B/E/S. But
analysts said it was not a major concern, noting the company
simply did not report as much from the Nortel business as the
market had assumed.

Ciena forecast third-quarter revenue of $375 million to
$400 million, straddling the market’s average forecast of $388
million.

The company’s second-quarter net loss was $90.0 million, or
97 cents per share, compared to a loss of $503.2 million, or
$5.53 a share, a year earlier.

Excluding special items, its quarterly loss was 13 cents a
share, compared to the Street’s forecast for a loss of 26
cents.

Ciena’s Smith said the integration Nortel’s optical
networking and Internet infrastructure unit was going well and
cited “positive market reaction” to the deal.

Nortel, once North America’s biggest telecommunications
equipment company, filed for bankruptcy protection in January
and put its assets up for sale.

The sale was part of a string of deals in the
telecommunications equipment space, as last year’s spending
cuts by carriers and the high costs of investing in new
wireless technologies forced many gear makers to consolidate.

Ciena shares rose 7 percent to $14.77 by mid-morning
trade.

Stock Market Basics

(Reporting by Ritsuko Ando; Editing by Derek Caney)

UPDATE 3-Ciena trims loss, says telco spending recovering