Will Ciena Corporation (CIEN) Stay Profitable This Quarter?

On Thursday, Ciena Corporation (NASDAQ:CIEN) will release its latest quarterly results. After having returned to profitability last quarter, the big question facing the stock is whether its earnings will dip back into the red in the coming report.

Ciena has suffered along with much of the rest of the networking industry, with ups and downs from changing trends among buyers of networking equipment. Overall, though, the company has done a good job of moving itself back to profitability, and investors are increasingly confident in Ciena Corporation (NASDAQ:CIEN)’s prospects going forward. Let’s take an early look at what’s been happening with Ciena over the past quarter and what we’re likely to see in its report.

Stats on Ciena

Source: Yahoo! Finance.

How will Ciena’s earnings fare this quarter?
Analysts have had generally favorable views of Ciena Corporation (NASDAQ:CIEN)’s long-term prospects in recent months. Although they’ve gone from calls for a break-even April quarter to a modest loss, they’ve raised their full-year fiscal 2013 estimates by $0.25 per share, and the stock has responded by rising more than 8% since the end of February.

Ciena started things off on the right foot, soaring after it reported favorable results in its previous quarter. Even in a tough environment for networking stocks, Ciena Corporation (NASDAQ:CIEN) reported an unexpected profit on 9% higher revenue, as North American customers Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) have been working hard to broaden the reach of their 4G networking as they seek to fend off new competition from reinvigorated rivals in the U.S. telecom market. Ciena even saw some success in Europe, where economic woes continue to depress the sector in general.

Ciena Corporation (NASDAQ:CIEN) hasn’t been afraid to tackle opportunities wherever they arise. In March, the company was chosen by the private company SEACOM to help improve Internet capacity in Africa, with upgrades to its undersea network helping to provide greater speed and affordability for African users. Meanwhile, Ciena also inked a deal with XO Communications in April to help it deliver high-definition video content over XO’s high-speed data network, and it ran a series of trials using the U.K. optical core network infrastructure of telecom company BT Group plc (ADR) (NYSE:BT) that Ciena said was the world’s first 800G super-channel.

But the big deal for Ciena Corporation (NASDAQ:CIEN) could come from Level 3 Communications, Inc. (NYSE:LVLT), which is considering abandoning its relationship with Huawei to find an alternative optical networking partner. Because of national security concerns, Level 3 has a big incentive to go with Ciena or rival Infinera Corp. (NASDAQ:INFN). The three-year deal could mean a big lift in profits for whichever company wins out, and so you can expect both Infinera and Ciena to lobby hard for Level 3’s business.