Ciena Reports Fiscal Third Quarter 2007 Results

For the nine months ended July 31, 2007, Ciena reported revenue of $563.6 million, representing an increase of 39.5% over revenue of $404.1 million for the same nine-month year-ago period.

On the basis of generally accepted accounting principles (GAAP), Ciena's net income for the fiscal third quarter 2007 was $28.3 million, or $0.29 per diluted share. This represents a 117.6% sequential increase from fiscal second quarter GAAP net income of $13.0 million, and compares with a reported GAAP net loss of $4.3 million, or a loss of $0.05 per share, for the same period a year ago. For the nine-month period ended July 31, 2007, Ciena's reported GAAP net income was $52.4 million, or $0.57 per diluted share. This compares to a GAAP net loss of $12.5 million, or $0.15 per share, for the same nine-month year-ago period. Note that calculating diluted earnings per share for the fiscal third quarter 2007 and for the nine-month period ended July 31, 2007 requires that the interest expense of $1.3 million and $2.2 million for the periods respectively, associated with the Company's 0.25% and 0.875% convertible senior notes, be added to GAAP net income in order to arrive at the numerator for the earnings per share calculation.

"Consistent execution of our network specialist strategy has enabled Ciena to benefit from two significant industry trends: the demand for increasing network capacity and the transition to Ethernet/IP-based network infrastructures," said Gary Smith, Ciena president and CEO. "At the same time, we continue to drive actions resulting in improved financial performance across the Company."

Non-GAAP Presentation of Quarterly Results
In evaluating the operating performance of its business, Ciena's management excludes certain charges and credits that are required by GAAP. These items, which are identified in the table that follows (in thousands, except per share data), share one or more of the following characteristics: they are unusual and Ciena does not expect them to recur in the ordinary course of its business; they do not involve the expenditure of cash; they are unrelated to the ongoing operation of the business in the ordinary course; or their magnitude and timing is largely outside of the Company's control.

Adjusting Ciena's unaudited fiscal third quarter 2007 GAAP net income of $28.3 million for the items noted above would increase the Company's adjusted (non-GAAP) net income in the quarter to $40.0 million. Adding the interest expense of $1.3 million associated with the Company's 0.25% and 0.875% convertible senior notes to the adjusted (non-GAAP) net income in order to arrive at the numerator for the earnings per share calculation, results in an as-adjusted net income of $0.41 per adjusted diluted share. This compares with an adjusted (non-GAAP) net income of $20.6 million, or $0.23 per adjusted diluted share, in the same year-ago period. Note that calculating the as-adjusted diluted earnings per share for the fiscal third quarter 2006 requires that interest expense of approximately $0.5 million associated with the Company's 0.25% convertible senior notes be added to GAAP net income in order to arrive at the numerator for the earnings per share calculation.

Third Quarter 2007 Performance Highlights
. Achieved sequential quarterly revenue growth of 5.9% and year-over-year revenue growth of 34.4%.

. Delivered overall gross margin of 47.7% and product gross margin of 53.7%.

. Delivered GAAP income from operations of 7.8% of revenue and 13.8% of revenue on an as-adjusted basis.

. Completed a public offering of 0.875% Convertible Senior Notes due 2017, in aggregate principal amount of $500 million.

. Ended the fiscal third quarter 2007 with cash, cash equivalents and short- and long-term investments of $1.7 billion.

Third Quarter 2007 Customer Highlights
. BT has deployed Ciena's optical Ethernet transport and switching solutions at more than 100 sites across the UK to support the roll- out of its 21st Century Network (21CN).

. THUS plc chose the CN 4200™ FlexSelect™ Advanced Services Platform to support the delivery of a new high-capacity, next- generation network to the London Metropolitan Network (LMN).

. AboveNet, Inc., a leader in private metro optical networks and fiber-based connectivity solutions for businesses and carriers, is deploying Ciena's CoreStream® Agility Optical Transport System to upgrade its core optical network that provides high-bandwidth, long-haul service between multiple metro networks throughout the U.S.

. Swedish University Network (SUNET) successfully rolled out its new 10-Gigabit Ethernet (GbE) network, OptoSUNET, using Ciena's FlexSelect Architecture including optical transmission, multiservice transport, Ethernet services and network management solutions.

. Internet2 FiberCo®, a fiber holding company formed to support dark fiber initiatives for U.S. research and higher education, teamed with Ciena to provide a suite of customized professional services and optical networking equipment solutions to assist Internet2 members with planning, installing, and managing their advanced network infrastructures.

. Mid-Atlantic Crossroads (MAX) selected the CoreDirector® Multiservice Switch for use in the organization's production and research networking efforts.

. Children's Hospital Boston, one of the largest pediatric medical centers in the United States, deployed the CN 4200 FlexSelect Advanced Services Platform to enable high-speed optical connections between multiple locations throughout its Boston campus, and facilities in nearby Waltham and Needham, Mass., to ensure reliable, efficient data connectivity for critical applications and seamless business continuity and disaster recovery.

. JANET(UK) successfully delivered its first 40 Gbps service in a production environment across its UK national research and education network, using the new 40 Gbps capabilities of Ciena's CoreStream Agility Optical Transport System.

Third Quarter 2007 Product Highlights
. Ciena introduced its FlexSelect 40G Shelf, a universal solution to transition metro, regional, long-haul and ultra long-haul networks to 40 Gbps while providing a migration path for 100G networking.

. The Company announced the CN 4200 RS FlexSelect Advanced Services Platform, the latest expansion of the Company's flagship CN 4200 family of products and its FlexSelect Architecture vision for flexible, service-enabled transport.

. EMC® E-Lab™ qualified the CN 4200 FlexSelect Advanced Services Platform at 4G and 10G Fibre Channel capacities.

. The CN 4200 FlexSelect Advanced Services Platform achieved technical acceptance under the United States Department of Agriculture (USDA)'s Rural Development Telecommunications Program, which offers funding and low-cost loans to service providers investing in networks that serve rural communities.

Business Outlook
"Our strategy of prioritizing our investments and targeting high growth market segments has enabled us to grow faster than the overall market for the past two years, and at this point, we are on track to do so once again with annual revenue growth of up to 37 percent in fiscal 2007," said Smith. "At the same time, as evidenced by this quarter's performance, we remain focused on maximizing the operating leverage in our business model."

Live Web Broadcast of Fiscal Third Quarter Results
Ciena will host a discussion of its fiscal third quarter results with investors and financial analysts today, Thursday, August 30, 2007 at 8:30 a.m. (Eastern). The live broadcast of the discussion will be available via Ciena's homepage at www.ciena.com. An archived version of the discussion will be available shortly following the conclusion of the live broadcast on the Investor Relations page of Ciena's website at: www.ciena.com.