Ciena Stock Rallies After Earnings. CEO Says “Demand Is Solid.”

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The optical networking hardware company is seeing strong demand from cloud providers.

Ciena shares were surging after the optical networking firm posted better-than-expected financial results, driven by growing demand for the company’s hardware from cloud computing providers.

Adjusted profit was 59 cents a share, ahead of the consensus forecast at 51 cents. Under generally accepted accounting principles, or GAAP, the company earned 20 cents a share. Adjusted gross margin was 42.7%, up from 40% in the year earlier period. Ciena, which historically has been primarily a provider to telecommunications companies, has been growing its business with cloud providers. Non-telco customers were a record high 46% of revenue in the quarter, the company said in a presentation to investors.

Some telecom suppliers, such as Ericsson and Nokia , have recently posted disappointing results, citing softer demand from North American telcos. But Smith said the issue is not a lack of demand, but instead the need to absorb hardware acquired. “It’s not a demand issue,” he told Barron’s. “They need the stuff.”

 

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