Ciena, recently the darling of the telecomms investors, has issued a profit warning, and confirmed it has lost AT&T as a customer for its key technology.
The telco equipment maker said net income for its third quarter would be between 13 and 15 cents per share, compared to the previous analysts' prediction of 32 cents a share. However, revenues will be up to $129 million, from $121.8 million last year.
Ciena blamed the shortfall on a delay in receiving an order of around $25 million, plus the change to calendar quarter financial reporting.
Patrick Nettles, Ciena's president and chief executive, said: "The quarter's results are evidence that, until we are able to more meaningfully diversify our customer base, Ciena's results for a given quarter could be significantly impacted by customer mix."
Ciena designs optical networking technology for carriers, called dense wavelength division multiplexing (DWDM), which enables telcos to build high capacity IP backbones to carry data and video services, rather than attempting to use their traditional TDM networks.
In June, the company announced a $7 billion merger with voice and data transport provider Tellabs, which is aiming to tackle giants Lucent and Nortel in the equipment arena.
Tellabs' chief executive, Michael Birck, was pragmatic about Ciena's profit warning. "We knew going into this merger that Ciena's business does not come without risks and short term volatility. We continue to believe in the long term strategic value of this transaction," he said.
Last week, AT&T said it will not instal Ciena's 16-channel DWDM technology, as indicated in official paperwork relating to the Ciena-Tellabs merger.
Ciena has enjoyed high profile this year. As well as the merger, it also acquired start-up Terabit Technology, and teamed up with Cisco to integrate the data networking giant's 12000 Gigabit switch router with its DWDM technology.
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