Telecommunications network specialist Ciena Corp. ( CIEN - Analyst Report ) reported fourth quarter fiscal 2011 loss per share of 7 cents, worse than the Zacks Consensus Estimate of a loss of 5 cents. The reported loss per share widened from the comparable prior-year quarter’s loss of 8 cents per share.

Revenue

During the fourth quarter 2011, total revenue increased 9.1% year over year to $455.5 million. The reported revenue came in at the higher end of management’s guidance range of $440.0 million to $460.0 million, but it could just sliver past the Zacks Consensus Estimate of $455.0 million.

Product revenue, which comprised 80.8% of the total revenue, was up 7.8% from the prior-year quarter to $368.0 million. Services revenue, representing 19.2% of the total revenue, increased 14.7% from the year-ago quarter to $87.4 million.

Sales to international customers represented 45.0% of the total revenue in this quarter, versus 48.0% in the previous quarter. The company had one 10.0% plus customer during the quarter, which accounted for 15.0% of total sales.

Margins

Adjusted gross profit jumped 8.0% year over year to $195.7 million in the quarter, mainly attributable to improved manufacturing efficiencies. Gross margin was 43.0% compared to 43.4% in the previous-year quarter.

Operating expenses decreased 6.6% year over year to $189.7 million. This decline was primarily due to a 13.4% year-over-year decrease in research and development expenses and a 23.8% decline in general and administrative expenses.

Adjusted operating income was $6.0 million compared to an operating loss of $7.2 million in the previous-year quarter.

Balance Sheet & Cash Flow

Ciena exited the quarter with $541.9 million in cash and cash equivalents, down from $486.3 million in the previous quarter. The company used $90.5 million in cash from operations versus $132.5 million cash used in the prior quarter.

Guidance

Ciena expects first quarter 2012 revenues in the range of $435.0 million to $455.0 million. The Zacks Consensus Estimate is pegged at $455.0 million.

Adjusted gross margin is projected to be in the low 40% range, consistent with the company’s near-term expectation. However, management expects adjusted operating expenses to be in the low $180 million range.

For the first quarter of 2012, the company did not provide any earnings per share guidance. However, at the time of the earnings release, the Zacks Consensus Estimate for first quarter 2012 was pegged at a loss of 2 cents.

Our Take

In the fourth quarter, Ciena witnessed growth across its business segments, as well as a favorable product mix and lower operating expenses. We anticipate a recovery based on impressive operational execution, a new product line-up and strong alignment of the company’s solutions to customer priorities. This would lead to a gradual improvement in results in the forthcoming quarters.

However, near-term results are expected to remain under pressure due to increased expenses, slowdown in carrier spending, intensifying competition from Cisco Systems Inc. ( CSCO - Analyst Report ) and Alcatel-Lucent ( ALU - Analyst Report ) and continued losses.

We have a long-term Neutral recommendation on Ciena shares. Ciena currently has a Zacks #3 Rank, implying a short-term Hold rating.