Ciena Corporation (CIEN) stock dropped more than 5% in the premarket session after second-quarter adjusted earnings missed Street’s expectations. The high-speed networking technology developer’s earnings plunged 63% as gross margin was impacted by several new, international service provider deployments in early stages.
Despite a 3% rise in revenue to $730 million, earnings dipped 63% to $13.9 million or $0.09 per share. Adjusted EPS decreased 23% to $0.23.
“We delivered strong revenue and record order flow in the second quarter as we continue to broaden our leadership and capture market share. We anticipate strong revenue growth in the second half of fiscal 2018 and we remain confident in our three-year financial targets,” executive chief Gary Smith said.
Segment-wise, revenue from Total Networking Platforms increased 3.5% helped by higher revenue from converged packet optical. Software and Software-Related Services revenue grew 2.7% on a rise in revenue from software-related services. Revenue from Global Services inched up 1.8% on higher maintenance support and training revenue. U.S. customers contributed 53.8% of total revenue.
In addition, Ciena announced today that it agreed to buy privately-held Packet Design, a provider of network performance management software. The purchase is intended to advance Ciena’s Blue Planet software strategy, extending its intelligent automation capabilities into IP with critical new features that help customers optimize service delivery and maximize network utilization. This deal is anticipated to close in the third quarter.
Shares of Ciena ended Wednesday’s regular trading session down 1.88% at $24.06 on the NYSE. The stock had been trading between $19.40 and $27.98 for the past 52 weeks.