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Ciena Stock Is Soaring. Earnings Were Strong, and There’s a Big Stock-Buyback Plan.


Ciena stock is trading sharply higher Thursday after the optical-networking-infrastructure company posted slightly better-than-expected results for its fiscal fourth quarter ended Oct. 31. It also unveiled plans for a large stock-repurchase program.

For the quarter, Ciena (ticker: CIEN) reported revenue of $1.04 billion, up 25.7% from a year ago, at the high end of the company’s guidance range of $1 billion to $1.04 billion, and just above the Wall Street consensus forecast at $1.03 billion. Non-GAAP profits of 85 cents a share were in line with Street estimates. Under generally accepted accounting principles, the company earned 66 cents a share.

For fiscal 2021, the company had revenue of $3.6 billion, up 2.5% from the previous year, with non-GAAP profits of 2.91 a share, down a few pennies from $2.95 in fiscal 2020.

Ciena shares have spiked 16% to $72.17.

The company also said its board has authorized a new $1 billion stock-repurchase program, including a $250 million accelerated share-repurchase plan expected to be completed in the fiscal 2022 second quarter. The company said it bought back $26.7 million of stock in the October quarter. Ciena has a market capitalization of about $11 billion.

“Our strong financial results exceeded our expectations in the fourth quarter and for the full fiscal year, driven by continued execution of our strategy and our demonstrated ability to manage supply chain challenges,” Ciena CEO Gary Smith said in a statement. “Looking ahead, we intend to continue driving growth in our business by leveraging our market leadership and investing to capitalize on robust demand dynamics. In addition, our strong balance sheet and cash generation expectations allow us to increase return of capital to our shareholders.”

In an interview with Barron’s, Smith added that while “it has been a challenging year for everybody,” Ciena has been able to successfully navigate through the supply-chain issues that continue to plague the technology hardware market. He notes that Ciena has built up a much higher-than-normal backlog of orders—$2.2 billion at the end of the fiscal year, up from $1 billion a year earlier. Smith says that the company is seeing strong demand from both carriers and “webscale” cloud providers, all of whom are trying to add capacity to catch up with demand.

Ciena is projecting first-quarter revenue of $870 million to $910 million, with the midpoint of $890 million slightly above the Street consensus at $881 million. The company sees fiscal 2022 revenue up 11%-13%, which implies $4.03 billion, slightly ahead of the old Street consensus at $3.9 billion. 

Asked about the source of the higher growth, Smith notes that the company is seeing particularly strong demand in Europe and India, where he says Ciena is taking market share from Huawei. He also notes especially strong demand for the company’s switching and routing products, and says that growth from webscale players is stronger than the business overall.

As for recent supply constraints, Smith says that lead times and logistics costs should start to normalize next year, but he thinks higher chip prices are going to linger for the next few years given ongoing tight manufacturing capacity. “I think we’re living with increased costs,” he says.

Write to Eric J. Savitz at [email protected]

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