: Ciena’s stock pares losses as company reiterates forecast after Lumentum warning

Networking company Ciena
CIEN,
-4.07%
continues to expect $1.035 billion to $1.115 billion in fiscal second-quarter revenue, along with adjusted gross margins in the low 40% range and adjusted operating expenses of about $335 million.

Additionally, Ciena is sticking with its full-year outlook for 2023, which calls for 20% to 22% revenue growth, adjusted gross margins of 42% to 44% and adjusted operating expenses of about $330 million a quarter for the balance of the period.

Ciena “is reaffirming its previous statements with respect to both the demand environment and the normalization of backlog and inventory dynamics,” the company said in a release.

Shares of Ciena, off as much as 8.2% earlier in Thursday morning’s action, were paring losses and down 4.7% after the company gave its update.

Lumentum
LITE,
-9.39%
disclosed late Wednesday that it no longer expected to meet its prior revenue forecast, as a corporate customer that made up more than 10% of its quarterly revenue in the fiscal second quarter had canceled an order late in Lumentum’s fiscal third quarter. In Lumentum’s last annual filing with the Securities and Exchange Commission, the company disclosed only Apple Inc.
AAPL,
+0.12%
and Ciena as representing more than 10% of its sales.

Analysts generally seemed to think Ciena was the customer Lumentum was referring to, though Jefferies analyst George Notter didn’t think the update should necessarily spark concern.

“We don’t believe the [Lumentum] pre-announcement tells us much about fundamental end-market demand for Ciena, positively or negatively,” Notter wrote overnight, prior to Ciena’s own update.

Notter offered that there could be “a number of reasons” Ciena might have canceled an order, including that lead times for Lumentum components were coming down or that Ciena “simply over-bought from Lumentum relative to their business outlook,” among other possibilities.