Ciena CEO Gary Smith says network modernization is in the early years of a multi-year growth cycle.
NEW YORK (TheStreet) - Ciena(:CIEN) CEO Gary Smith said the optical networking company is poised to benefit from a shift in the modernization of networks for years to come.
The Linthicum, Md.-based company reported earnings Thursday that beat Wall Street guidance, leading to an uptick in shares. But the shares have had a rough year to date, down more than 40%.
Ciena CEO Gary Smith
The company provided guidance for the first quarter of 2012 that was weaker than expected, but Smith said Ciena is growing faster than the market, about 10% year over year, and is poised to benefit as networks become more modern and Ciena's products are used.
Smith said modernization is "absolutely a multi-year growth story" as major tier 1 customers like AT&T(:T) retain their spending patterns, particularly on Ciena's transport products. Smith said Ciena doesn't need its major customers to increase their spending; it's the mix of their spending from which Ciena is benefiting.
He noted that Ciena continues to experience strong orders, which was first mentioned on a conference call with analysts and investors earlier Thursday.
Regarding headwinds in Europe, Smith said there is nothing more than what the company already has seen in the past few quarters.
"Business is doing OK in Europe," Smith noted. He believes the economic uncertainty in the region will continue for a while. Smith said European corporations have increased their caution and elongated spending cycles.
Ciena's stock has a high short position, with a ratio of 4.5 days to cover. When asked what investors might be missing on the story, Smith said, "Ciena has a number of design wins and that there are many more efficiencies that the company can achieve from the business."
Shares of Ciena rose 3.7% to $12.35.
--Written by Chris Ciaccia in New York
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