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Ciena Corporation (NASDAQ: CIEN) yesterday reported 17.2% sequential growth, topping guidance of 5% to 10% growth. EPS was a massive $0.26, for a company that has been flirting with the break-even level for years. Results seem to show a big breakthrough for this long-time tech turnaround story.What drove the stock higher in after-hours trading is company guidance. Management guided to 10% operating margins, a 290 basis point increase, much stronger than expected. Also gross margins could revisit the mid-40% level.
Ciena also turned operating cash flow positive in the quarter, generating $38 million in cash, up from a $16.6 million cash drain in the previous quarter.
Ciena will be a massive cash flow generator as operating leverage kicks in. Pay up for this stock and hold it for the next 12 to 18 months.
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