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Correction to This Article
An article in the Dec. 10 Business section incorrectly reported Ciena Corp.'s revenue for the fourth quarter of fiscal 2004. It was $82 million, not $84 million -- a 16 percent increase over the same quarter in 2003, not a 19 percent increase.

Ciena's Loss Tempered by Rise in Revenue

By Annys Shin
Washington Post Staff Writer
Friday, December 10, 2004; Page E05

Ciena Corp. yesterday reported a widened loss, but fourth-quarter revenue grew nearly 19 percent, and the maker of telecommunications equipment predicted significant growth in the current period.

For the first time in several quarters, the company beat its own guidance and Wall Street forecasts. Shares of Ciena closed at $2.88, up 54 cents, or 23 percent.

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The Linthicum-based company said it lost $495 million (87 cents per share), compared with a loss of $115 million (24 cents) in the same quarter a year earlier. Ciena said the current-year loss included a one-time "goodwill impairment" charge of $371.7 million to more accurately reflect weakened telecom market conditions.

Revenue for the fourth quarter grew to $84 million, up from $70.6 million for the same quarter a year earlier and higher than the about $77 million analysts were expecting.

Ciena officials stressed during a conference call that the revenue growth was the result of a two-year effort to diversify Ciena's products and customer base to include cable operators, government entities and telecommunications companies. Company officials attributed the rise in revenue to the sale of products Ciena added through acquisitions, accounting for at least one-third of fourth-quarter revenue.

"We're a very different company today than we were two years ago," said Gary B. Smith, president and chief executive, during the conference call. "Two years ago, the majority of our business was in the core of our network. I think we're a more diversified business now."

Not long ago, Ciena looked as if it would go down as another victim of the telecom bust. In recent years, however, it has attempted to expand beyond its core business of supplying equipment for fiber-optic communications networks by acquiring companies. In May, for example, Ciena concluded its purchases of Catena Networks, a broadband access company, and Internet Photonics, a supplier of carrier-grade optical Ethernet transport and switching solutions.

"This is a company that is well from break-even," said Timm P. Bechter, vice president and broadband equipment analyst for Legg Mason. "They're trying to lower costs. They've been missing on their guidance for a number of quarters. It's been a perpetual downward trend. Finally, they did the opposite." Bechter does not own any Ciena stock.

For fiscal 2004, the company reported a loss of $789.5 million ($1.51 per share), compared with a loss of $387.5 million (87 cents) a year ago.

Ciena officials said during the conference call they still have a lot of work to do. "What we're seeing is encouraging," said Smith. "But we don't want to get ahead of ourselves."

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