Ciena Corporation CIEN reported lackluster fourth-quarter fiscal 2020 (ended Oct 31, 2020) results, wherein the bottom line missed the Zacks Consensus Estimate.
The Hanover, MD-based networking systems and software company expects the challenging market conditions to persist in the near term.
On a GAAP basis, net income in the quarter was $65 million or 42 cents per share compared with $80.3 million or 51 cents per share in the year-ago quarter. The deterioration resulted from a higher provision for income tax.
Adjusted net income came in at $94.5 million or 60 cents per share compared with $90.4 million or 58 cents per share in the prior-year quarter. The bottom line missed the Zacks Consensus Estimate by 4 cents.
Ciena Corporation Price, Consensus and EPS Surprise
Ciena Corporation price-consensus-eps-surprise-chart | Ciena Corporation Quote
In fiscal 2020, GAAP net income was $361.3 million or $2.32 per share compared with $253.4 million or $1.61 per share in fiscal 2019.
Quarterly total revenues fell 14.4% year over year to $828.5 million, primarily due to a slowdown in orders caused by the pandemic. The top line matched the consensus estimate.
Region-wise, revenues in the Americas were $531.6 million, down 25.7% year over year. Revenues in Europe, Middle East and Africa were $157.6 million, up from $153 million. Asia-Pacific revenues totaled $139.3 million, up 40.3%.
In fiscal 2020, revenues declined 1.1% year over year to $3,532.2 million.
Quarterly Segment Results
Total revenues in Networking Platforms decreased 20.4% year over year to $635.3 million. Platform Software and Services revenues were $54.5 million compared with $41.2 million in the prior-year quarter. Blue Planet Automation Software and Services revenues increased from $16.6 million to $20.9 million. Total revenues in Global Services were $117.8 million, up 4.7%.
Adjusted gross margin was 49.5% compared with 43.8% in the year-ago quarter. Adjusted operating expenses were $278.9 million, down from $295.3 million. Operating income improved to $93.5 million from $93.2 million. Adjusted operating income increased to $130.9 million from $129.2 million. The adjusted operating margin came in at 15.8% compared with 13.3% in the prior-year quarter. Adjusted EBITDA was $154.5 million, up from $151.6 million.
The company stated that it will be reinstituting the share repurchase program in the first quarter of 2021. It is targeting repurchases of $150 million in fiscal 2021.
Cash Flow & Liquidity
In fiscal 2020, Ciena generated $493.7 million of net cash from operating activities compared with $413.1 million in fiscal 2019.
As of Oct 31, the company had $1,088.6 million in cash and cash equivalents with $676.4 million of net long-term debt compared with the respective tallies of $904 million and $680.4 million a year ago.
Zacks Rank & Stocks to Consider
Ciena currently has a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the broader industry are Plantronics PLT, United States Cellular USM and NIC EGOV, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Plantronics delivered a trailing four-quarter positive earnings surprise of 568.2%, on average.
U.S. Cellular delivered a trailing four-quarter positive earnings surprise of 231.1%, on average.
NIC delivered a trailing four-quarter positive earnings surprise of 27.5%, on average. The company’s earnings beat the Zacks Consensus Estimate in two of the last four quarters.
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