|Nevertheless, Ciena is due to recognize "mid- to high-single-digit millions" of metro revenues from Verizon in the third quarter, according to Genovese. He also believes that CenturyLink and Comcast have "meaningfully accelerated" metro spending with Ciena and that AT&T will remain an important customer and "grow its contribution in line with Ciena's overall revenue growth driven by incremental metro 100G+ builds."|
One slight concern is the pricing pressure in the competitive European market for routers and optical equipment. That has already led to some gross-margin problems for companies such as Infinera and Juniper Networks Inc. (NYSE: JNPR), but Genovese expects Ciena to report a healthy gross margin of 45%, or even higher, in the third quarter, thanks to "high-margin revenues [from] packet networking and software, as well as by diligent supply chain management."