Ciena on Thursday reported October-quarter profit and revenue that easily topped analyst estimates as supply chain problems eased. Management forecast fiscal 2023 revenue growth in a range of 16% to 18% and Ciena stock soared.
Fiscal 2023 starts with the current quarter ending in January.
Ciena earnings for its fiscal fourth quarter were 61 cents a share, down 28% from a year ago. Revenue fell 7% to $971 million, the company said.
A year earlier, Ciena earned 85 cents a share on sales of $1.04 billion. Analysts expected earnings of 8 cents a share on sales of $850 million for Ciena stock.
The Hanover, Md.-based maker of optical communications gear and software reported earnings before the market open. Shares of Ciena stock surged nearly 20% to close at 51.87 on the stock market today.
"Our strong fiscal fourth quarter financial results were better than expected as we benefited from some favorable supply chain developments in the second half of the quarter," said Chief Executive Gary Smith, in the earnings release. "Looking ahead, we expect to deliver outsized revenue growth in fiscal 2023 given our significant backlog and continued signs of gradual supply improvement."
Supply Chain Issues Ease
Heading into the Ciena earnings report, management had lowered guidance three times in 2022 amid continued supply chain constraints. Ciena's production of network gear has been slowed by component shortages.
On the plus side, Ciena had record order backlog of $4.4 billion at the end of the July quarter.
"Ciena continues to suffer from component shortages, but experienced improvement," said Raymond James analyst Simon Leopold in a report. "Ciena's image suffered in prior quarters thanks to supply chain missteps, but its technology leadership has not come into doubt. The trip ahead might have its fits and starts with ongoing supply issues and project lumpiness, but the outlook for improving margin and good growth remains bright."
Ciena Stock: Revenue Guidance On Earnings Call
Ciena stock has retreated more than 44% thus far in 2022. Heading into the Ciena earnings report, the company owned a Relative Strength Rating of 36 out of a best-possible 99, according to IBD Stock Checkup.
Ciena's gear is built into telecom networks and internet data centers. In addition, the company competes against Infineraand Cisco Systems.
Ciena recently made two acquisitions – Tibit and Benu – targeting the telecom market.
Ciena stock may gain in fiscal 2023 from U.S. government political pressure on China's Huawei, analysts say. Some countries have halted purchases of Huawei network gear on national security concerns.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
