Shares of companies in the optical component sector, including Finisar (FNSR) and Oclaro (OCLR), are following Ciena (CIEN) lower on Thursday. Ciena offered up a gloomy view of the fourth quarter earlier today, despite reporting better than expected fiscal third-quarter earnings and revenue. The declines are especially notable as the broader tech sector is rallying hard going into the holiday weekend. Ciena, a global supplier of telecommunications networking equipment, operates in four segments: Converged Packet Optical, Packet Networking, Optical Transport, and Software & Services.

RECAP: For Q3, Ciena reported earnings per share of 51c on revenue of $728.7M. Analysts were modeling Q3 EPS to be 49c on revenue of $726.8M. The company provided a Q4 revenue view of $720M-$750M against consensus expectations of $770.3M. Speaking on a conference call earlier, Ciena CEO Gary Smith attributed the lower than forecast Q4 guidance to "a couple of small variables in the North American marketplace." Some U.S. government related business the company was modeling in is unlikely to materialize. Smith believes this is due to some overarching industry headwinds that other companies in the space "have recently referenced." Also, according to the CEO, the company has seen "some softness in orders from a handful of regional service providers in North America really related to very customer-specific challenges, including things like M&A and integration activities." While speaking earlier, Smith referenced a recent industry report out of technology infrastructure researcher Dell'Oro Group: "For example, Dell'Oro recently stated that the optical transport market is currently experiencing negative growth, falling 3% year-over-year in calendar Q2 '17. The analyst noted that all regions declined except for Asia Pacific, which is consistent with what we're seeing in the marketplace. And in North America alone, where we remain very strong, the same analyst firm has indicated a 9.6% decline on a rolling 4-quarter basis, which compares and contrasts to our year-to-date growth of 6% that I mentioned earlier." The company continues to believe that Asia-Pacific will be a growth driver over the next couple of years. "It's not just India, although India is a stellar part of it. Australia, we're doing extremely well with Telstra through the Ericsson partnership. Japan has opportunities for us. We're going to be attacking in some other countries in the region. So Asia-Pacific will be a place of growth for us for the foreseeable future," said Smith during the Q&A part of the call.

PRICE ACTION: In afternoon trading Ciena is down 10% to $21.83 per share. Meanwhile, shares of Finisar, Oclaro, Applied Optoelectronics (AAOI), Viavi (VIAV), NeoPhotonics (NPTN) are all lower in late day trading as well.