Ciena - CIENA Reports First Quarter Revenue of $100.4 Million, Net Income of $0.02 Per Share

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CIENA Reports First Quarter Revenue of $100.4 Million, Net Income of $0.02 Per Share - Customer Diversification Continues

Linthicum, MD — 02/18/1999

Ciena Corporation (NASDAQ:CIEN - news) today reported revenue of $100.4 million for its first fiscal quarter ended January 31, 1999, compared to revenue of $91.2 million in the previous quarter and $145.1 million for the same period a year ago.

Net income for the first quarter was $2.3 million, or $0.02 per share. This compares with a net loss of $3.9 million, or $0.04 per share, reported in the previous quarter and net income of $39.7 million, or $0.37 per share, for the same period in fiscal 1998.(1) First Call consensus expectations for the period were for a loss of $0.01 per share.

Ciena continued to make progress toward its goal of diversifying its customer base, recognizing revenue during the quarter from a total of 13 optical transport customers, including two customers yet to be named publicly, as well as from more than 50 customers for its Ciena Services or Alta subsidiary. Ciena has now recognized revenue from a total of 17 transport equipment customers in its history.

``A year ago, few would have speculated that the bandwidth tsunami unleashed by the application of dense wavelength division multiplexing technology would grow to create such a sizable optical networking opportunity spread across such a wide range of service providers,'' said Patrick Nettles, Ciena's president and chief executive officer. ``It's becoming clear that the power and flexibility enabled by optics is destined to push out from the core of the network and Ciena intends to be a driving force behind that push.''

``We've executed a deliberate, focused strategy targeting competitive carriers both domestically and internationally and, as evidenced by our win at Telemonde and the extension of our relationship with Hermes Europe Railtel, it appears that those efforts are beginning to pay off,'' continued Nettles. ``We'll work to continue to leverage our market and technology leadership, our world-class reputation and our real-world, real-network experience to capture ever increasing customer presence.''

``While we're pleased to have demonstrated measured improvement this quarter over last, we believe it's important not to let expectations of our performance get ahead of themselves,'' concluded Nettles. ``Demand for optical networking equipment continues to appear robust, fueled in part by the spreading acceptance and adoption of Ciena's vision of direct optical transport of data-centric IP or ATM traffic, but based on visibility that remains limited beyond the current quarter, we continue to encourage conservative expectations.''

Ciena Corporation

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

Quarter ended January 31,
1998		1999
Revenue	$ 145,092		$ 100,417
Cost of goods sold	58,980		65,778
Gross profit	86,112		34,639

Operating expenses:
Research and development	10,203		17,416
Selling and marketing	9,968		12,568
General and administrative	3,792		4,261
Total operating expenses	23,963		34,245

Income from operations	62,149	394

Interest and other income (expense), net	3,775	3,117

Interest expense	(84)	(58)

Income before income taxes	65,840	3,453

Provision for income taxes	26,142	1,191

Net income	$ 39,698	$ 2,262

Basic net income per common share	$ 0.39	$ 0.02

Diluted net income per common share and dilutive potential common share	$ 0.37	$ 0.02

Weighted average basic common shares outstanding	100,641	103,292

Weighted average basic common and dilutive potential common shares outstanding	107,552	107,826

Ciena Corporation

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data

October 31,		January 31,
1998			1999

ASSETS
Current assets:
Cash and cash equivalents	$ 227,397		$ 194,683
Marketable debt securities	15,993		89,702
Accounts receivable, net	85,472		80,257
Inventories, net	70,908		58,571
Deferred income taxes	15,301		11,525
Prepaid income taxes	8,558		-
Prepaid expenses and other	4,415		9,626
Total current assets	428,044		444,364
Equipment, furniture and fixtures, net	123,405		124,317
Goodwill and other intangible assets, net	16,270		15,361
Other assets	4,705		4,644
Total assets	$ 572,424		588,686

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$ 25,686		$ 30,576
Accrued liabilities	34,328		37,414
Income taxes payable	-		3,145
Deferred revenue	1,084		785
Other current obligations	838		792
Total current liabilities	61,936		72,712
Deferred income taxes	34,125		34,314
Other long-term obligations	1,414		1,255
Total liabilities	97,475		108,281
Commitments and contingencies	-		-
Stockholders' equity:
Preferred stock - par value $.01; 20,000,000 shares authorized; zero shares
issued and outstanding	-		-
Common stock - par value $.01; 360,000,000 shares authorized;
103,239,704 and 103,367,378 shares issued and outstanding	1,032		1,034
Additional paid-in capital	294,926		298,117
Notes receivable from stockholders	(357)		(355)
Cumulative translation adjustment	(107)		(108)
Retained earnings	179,455		181,717
Total stockholders' equity	474,949		480,405
Total liabilities and stockholders' equity	572,424		$ 588,686

About Ciena

Ciena specializes in network transition. We provide the flexible platforms, intelligent software and professional services to build converged networks for enhanced services and applications. With a growing global presence, Ciena leverages its heritage of practical innovation to deliver maximum performance and economic value in communications networks worldwide. For more information, visit www.ciena.com.

Note to Investors
Forward-looking statements in this release, including statements regarding (1) the size and scope of the optical networking opportunity, (2) the company's ability to leverage its market and technology leadership, its world-class reputation and its real-world, real-network experience to capture ever increasing customer presence, and, (3) the apparent robustness of demand for optical networking equipment are based on information available to the Company as of the date hereof. The Company's actual results could differ materially from those stated or implied by such forward-looking statements, due to risks and uncertainties associated with the Company's business. The forward-looking statements should be considered in the context of these and other risk factors disclosed in the Company's report on Form 10-Q, as filed with the Securities and Exchange Commission on February 18, 1998.

Press Contacts:
Nicole Anderson
Ciena Corporation
(877) 857 -7377
pr@ciena.com

Investor Contacts:
Marie Downing
Ciena Corporation
(888) 243-6223
ir@ciena.com