Ciena Corporation (NASDAQ: CIEN), a supplier of communications networking equipment, software and services may find going tough in the current environment given the fact that carriers are cutting down on spending as recession deepens.

On December 11, the company reported that it swung to loss in fiscal fourth quarter ended Oct. 31. the firm recorded a loss of a loss of $25.4 million, or 28 cents a share, compared to a profit of $30.4 million, or 30 cents a share, in corresponding quarter, a year ago. Excluding one-time charges and items, loss came at 10 cents a share that compares to an adjusted profit of 48 cents a share in the year ago quarter. Revenue for the quarter fell 17% to $179.7 million from $216.2 million in the year-earlier quarter. Analysts on average were looking for a quarterly profit of 6 cents a share on revenue of $199 million. The company itself had provided revenue guidance in the range of $190 million to $210 million when it announced its third quarter results. The Linthicum, Maryland based company blamed a "challenging macroeconomic and industry environment," for disappointing numbers.

For the fiscal year 2008, however, revenue rose 16% from $780 million to $902 million in 2008. That was below the $990 million the company had predicted.Net income was down 53% from the $83 million in profit in 2007.

The revenue forecast for first quarter of next year also fell short of Wall Street expectations. The company expects to register first-quarter revenue of $170 million to $185 million, way below the consensus estimates of $190.5 million.

President and Chief Executive Officer Gary Smith admitted that outlook was bleak in short term. "Our short-term visibility is limited, however, as the rapidly unfolding macroeconomic climate causes increased [capital expenditure] scrutiny among our customers," he said. He added that the "current, challenging environment" to continue through 2009.

However he sounded hopeful when he said "Longer term, we believe that underlying capacity demands and our customers' business need to transition to more efficient networks remain fundamental demand drivers for our business."

However, as far as some recent development goes there aren't many reasons to sound optimistic, even in medium term. Ciena basically supplies network equipment to communication service providers like AT&T (NYSE: T) and Sprint Nextel (NYSE: S) and British Telecom (NYSE: BT), to name a few, all of which are feeling the pinch of economic downturn. Recently, AT&T, the largest U.S. telecommunications company said it intends to reduce capital expenditures for 2009 from the 2008 levels. The company also plans to eliminate approximately 12,000 jobs, or about 4% of its workforce. Few weeks back, British Telecom also announced to lay off 10,000 workers. Spring Nextel's Chief Financial Officer Bob Brust said a couple of days back 3 U.S. wireless service would continue spending on network maintenance in 2009, but would hold off on network expansion to help maintain the company's cash position. In short, mounting layoffs and falling consumer spending will eventually force the telecom operator's expansion plan as they will either abandon or delay projects. This in turn will seriously impact the company's business. Three months back, Ciena claimed that it has "seen no project or order cancellations." The projects, according to company are just “pushed out.” However, given the intensification of crisis in last couple of months, the company may also face the threat of project cancellations in near term.

On the bright side, there is $917.01 million of cash sitting on the company's balance sheet, which translates into 10.136 cash per share. The share of the company is trading below $7 and that prompts many an analysts to call the stock a good value buy. The company has about $798 million in debts, P/E of 8.86 and PEG ratio of 8.89.

Thus, the company seems vulnerable in short to medium term and may continue to deliver depressing numbers in next few quarters. A slight improvement on macro front however, may resume its uphill climb.

Ciena Corp. rose 28 cents or 4.57% to $6.41 on Monday. Shares of the company are down over 80% from 52 week high of $37.01.

Disclosure: Author does not own any of the stocks discussed here.