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Ciena Surprises with Profit Rise; Brightens  Outlook

Communications equipment maker Ciena Corp posted a higher-than-expected rise in quarterly profit Friday and gave an outlook above market expectations, saying strong demand for faster networks helped it avoid being hurt by a weaker economy.

Shares rose 3.4 percent after the news Friday. Even with those gains, however, the stock is

down 48 percent from 2007 highs on worries about increasing competition from bigger rivals, many of which have merged over the past few years.

Ciena , which sells optical switches and other products that support Internet protocol (IP) networks, said it was optimistic about its outlook. The company forecast full-year revenue growth of up to 27 percent, better than the average analyst forecast of 22 percent growth according to Reuters Estimates.

"While we are mindful of the macro economic environment, indications from our customers to date suggest no change in the fundamental drivers of Ciena's business: the demand for increasing network capacity and the transition to ethernet/IP-based network infrastructures," Ciena Chief Executive Gary Smith said in a statement. "Accordingly, we remain optimistic about our outlook for the year."

Ciena said its fiscal first-quarter revenue rose 38 percent to $227.4 million. Analysts, on average, had forecast revenue of $225.7 million for the quarter, which ended Jan. 31, according to Reuters Estimates.

Quarterly net profit rose to $28.8 million, or 28 cents a share, from $11.1 million, or 12 cents a share, in the same quarter a year earlier. Adjusted earnings rose to 47 cents from 22 cents, far exceeding the average analyst forecast of 39 cents, according to Reuters Estimates.

One of the highlights of the quarter was a multiyear contract to provide ethernet products to top U.S. phone company AT&T .

Ciena's competitors, aside from industry leader Cisco Systems , include Alcatel-Lucent , Ericsson, and Nokia Siemens.