CIENA announces preliminary 3Q04 results

Fiber Optics Weekly Update, August 6, 2004

CIENA Corporation, a global provider of intelligent service creation and delivery solutions, announced it expects to report fiscal third quarter revenue for the period ended July 31, 2004, of approximately $75 million, representing slight sequential revenue growth and year-over-year revenue growth of approximately 9 percent.

The Company stated previously that it anticipated revenue growth of up to as much as 30 percent from fiscal second quarter revenue of $74.7 million. The Company attributed the difference between current expectations and its previous expectations to an ongoing environment of uncertainty resulting in cautious spending and deployment delays by its large service provider customers, including a deceleration of DSL-related orders in North America.

Due in part to its ongoing, company-wide cost-reduction efforts, CIENA anticipates lower-than-expected research and development, sales and marketing and general and administrative expenses for the period. CIENA expects that under Generally Accepted Accounting Principles (GAAP), its loss per share for the fiscal third quarter will be reported in a range of $0.24 to $0.26.

In evaluating the operating performance of its business, CIENA's management excludes certain charges or credits that are required by GAAP. These items, such as deferred stock compensation costs; amortization of intangible assets; in-process research and development costs; accelerated amortization of leasehold improvements; restructuring costs; gain or loss on equity investments; and recovery and settlement of sales, use, and export tax liabilities; share one or more of the following characteristics:

- They are unusual, and CIENA does not expect them to recur in the ordinary course of its business;

- They do not involve the expenditure of cash;

- They are unrelated to the ongoing operation of the business in the ordinary course; or

- Their magnitude and timing is largely outside of the Company's control.

Exclusive of such items in its fiscal third quarter, CIENA expects its non-GAAP loss per share will be reported in a range of $0.07 to $0.08, consistent with the Company's previously offered guidance of a loss in the range of $0.06 to $0.08 per share, despite the lower-than-anticipated revenue expectations in the quarter. The Company expects to end its fiscal third quarter with approximately $1.3 billion in cash, cash equivalents, and investments.

CIENA intends to report third quarter 2004 results on Thursday, August 19, 2004, prior to the open of the financial markets.