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Why Ciena Corporation Shares Sank Today

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What happened

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Shares of Ciena Corporation (NYSE: CIEN) sank today, down by 9% as of 1:45 p.m. EDT, after the networking specialist reported fiscal third-quarter earnings. While the results beat expectations, investors were likely disappointed with revenue outlook for the coming quarter.

So what

Revenue in the third quarter totaled $728.7 million, up 9% year over year and ahead of the $726.9 million that the Street was expecting. The company posted non-GAAP earnings per share of $0.51, also topping the consensus estimate of $0.49 per share in adjusted profits.

Gross margin was 45%, with an operating margin of 11.3%. Ciena closed out the quarter with $854.2 million in cash and investments.

Now what

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"We delivered another solid quarter with strong revenue growth and profitability, and we took additional market share through our diversification and innovation leadership," CEO Gary B. Smith said in a statement. "Our continued success, combined with strong fundamental demand drivers that are playing in our favor, is drawing a clear division between the winners and losers in the marketplace."

What could be bothering investors is the outlook for the fiscal fourth quarter. Revenue in the coming quarter is expected in the range of $720 million to $750 million, which is shy of the $766.7 million in sales that analysts were modeling for. Non-GAAP gross margin is expected in the "mid-40s percentage range" and adjusted operating expenses should be roughly $240 million.

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Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.