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Ciena warns, cuts jobs
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February 5, 2002: 12:54 p.m. ET
Optical networking firm says 1Q loss wider than expected; cuts 12% of staff.
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NEW YORK (CNN/Money) - Ciena Corp. warned Tuesday that it expects its first-quarter results to miss Wall Street expectations and said it plans to cut about 400 jobs, or about 12 percent of its total work force.
The Linthicum, Md.-based optical networking company said it expects to report a loss of between 19 cents and 22 cents a share for its fiscal first quarter ending Jan. 31. Analysts surveyed by earnings tracker First Call expected Ciena to lose 11 cents a share in the quarter.
Shares of Ciena (CIEN: down $0.61 to $9.51, Research, Estimates) fell more than 6 percent in midday trading on the Nasdaq.
"Our first-quarter revenues were lower than expected because during the quarter, several of our major customers made substantial changes in their deployment plans, resulting in significant reductions in the amounts of equipment they had previously indicated they anticipated purchasing from us," Ciena CEO Gary Smith said.
UBS Warburg analyst Nikos Theodosopoulos said Ciena's revision was not a surprise given the industry's struggles, including continued spending cuts by large telephone carriers and recent bankruptcies filed by high-speed communications services company Global Crossing Ltd. and local phone company McLeodUSA Inc.
"I don't think Ciena's at fault," he said. "Everyone in this sector is suffering the same problems."
The profits and stock prices of former highfliers such as Ciena, JDS Uniphase (JDSU: Research, Estimates) and Lucent (LU: Research, Estimates) have suffered from the slowdown in spending. Ciena, for example, lost $1.4 billion in the fourth quarter.
"Historically, our first fiscal quarter has benefited from the start of the new calendar year and the corresponding renewal of service providers' capital expense budgets," Smith said. "However, even now, a month into the new calendar year, our customers' capital budgets and deployment plans for 2002 remain uncertain."
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"A lot of people were hoping to see a bottom in the first quarter of the calendar year," said Shawn Campbell, an analyst with Northern Trust Corp.'s asset management arm. "At the very least, it looks like the bottom is getting pushed back to the second quarter."
Smith added that the recent bankruptcies in the telecom industry are necessary to spur a market recovery and further consolidation is needed to restore the industry's health.
Workers losing their jobs will be paid through April 5, Ciena said. The company expects to take a charge of between $9 million and $11 million in its fiscal second quarter related to the job cuts and other restructuring.
Shares of Ciena fell 15 percent Monday after ABN Amro cut its rating on the stock to "hold" from "add." 
-- from staff and wire reports
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