Cyan to miss 4Q13 revenue guidance

Optical transport systems and software-defined networking (SDN) platform vendor Cyan (NYSE:CYNI) has preannounced earnings for its 2013 fourth quarter, ended December 31, 2013. And they’re not pretty – the company expects to fall short of its previously announced guidance by about 33%.

Cyan management says they now expect to report $20 million to $21 million in sales for the quarter, well off their guidance of $30 million to $33 million. The fault lies with the company’s largest customer, Windstream, which cut orders from $19 million in Cyan’s third fiscal quarter to $2 million in the fourth quarter, a drop of 89%.

"We are very disappointed with our preliminary fourth quarter 2013 revenue results, which were significantly impacted by a sharp decline in orders from our largest customer," said Mark Floyd, Cyan's CEO. "Although we expect revenue from this customer to represent a meaningful portion of our revenue in future periods, we expect that it will continue to fluctuate from quarter-to-quarter. As we previously noted, our business in the near term is substantially dependent on this customer while we ramp revenue from new accounts and expand our customer base."

Cyan asserted that it has made progress in balancing its revenue stream. The company said it expects to report that 2013 revenues from companies other than Windstream will fall in the range of $70 million to $71 million, up 32% to 34% versus 2012. "Additionally, we continued to make progress with our Tier 1 opportunities as lab trials and proof-of-concept activities continue,” Floyd added. “Our BluePlanet software is a key differentiator for Cyan and we remain confident in our long-term prospects and opportunity to capitalize on the widespread and fundamental shift to software defined WAN networks."

Total revenues for the year should be within the range of $116 million to $117 million, the company added. Cyan plans to announce full results for the quarter and year ended December 31, 2013, guidance for the first quarter of 2014, and an updated outlook for the full 2014 year early next month.

Investors appear to be taking the news hard. As of 10:20 AM EST this morning, Cyan’s stock had dropped $1.42 (-27.47%) to $3.75.

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