After months of sluggish growth, telecom carriers have begun upgrading their networks to further improve services. As a result, there is a sharp rise in capital spending amongst the operators, driving telecom equipment sales higher.
One network equipment maker benefitting from this trend is Ciena Corp (News - Alert). According to reports, with telecom carriers upgrading to 4G networks, Ciena is expecting improved revenue in 2013. Its shares have risen by as much as 5.5 percent, reports Reuters.
As per the report, telecom carriers are exploring optical equipments from suppliers like Ciena as they roll out their 4G LTE (News - Alert) networks.
To upgrade its wireless and wireline networks, AT&T Inc., which accounted for about 15.5 percent of Ciena's fiscal 2011 revenue, said that it will boost capital spending by about 16 percent to $22 billion a year for the next three years.
Similarly, on a conference call with analysts, Ciena’s chief financial officer Jim Moylan stated that Ciena's backlog rose 25 percent to $900 million at the end of the fiscal year. With this growth, the company’s operating expenses would go higher in 2013 as it would have to hire more sales staff and raise employee compensation.
The report indicates that Ciena is projecting first-quarter revenue to be between $435 million and $460 million. Analysts were expecting revenue of $458.6 million.
According to Ciena, the orders for the fourth quarter reached a new high, resulting in a total revenue of $2 billion for the full year. Revenue rose two percent to $465.5 million in the fourth quarter, net loss widened to $38.8 million, or 39 cents per share from $22.3 million, or 23 cents per share, a year earlier.
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Edited by Brooke Neuman