Contemplating Ciena's Q2 Results

9/6/17

Ciena (NASDAQ:CIEN) is a large network infrastructure company, providing both hardware and software for communications networks. Revenue is predominantly hardware, resulting in a reasonable mid-40s gross margin as you can see below. The sector has some tailwinds over the next several years, with data transfer for data centers and US metropolitan networks picking up. Still, the networking and related fiber optic sectors have seen significant weakness in 2017. Ciena has been one of the stronger performers in the sector with 8.7% revenue growth in Q2 2017 vs. Q2 of 2016 (Fiscal Q3). However, this has not translated into share gains, with CIEN down nearly 10% YTD. As I look a bit deeper into the quarter those who are on the sidelines will likely not find much to change their minds, but current longs should not be displeased either. Here are the pros and cons of the company's Calendar Q2 or its fiscal Q3 results.

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