Fresh from its acquisition of Internet Photonics, Ciena Corp. reported third quarter earnings that reflected a modest boost in business but a swelling net loss.

The Linthicum, Md.-based supplier of service management and delivery products reported revenue for the quarter ending July 31 of $75.6 million, a 1.2 percent increase compared to the second quarter, and a 10.4 percent increase compared to the third quarter of 2003.

Net losses totaled $141.5 million, compared to a loss of $88.9 million posted for the same quarter of 2003.

Nevertheless, the company did improve gross margin from 11 percent in the second quarter to 24.9 percent in the third, and it completed the acquisition of optical Ethernet transport specialist Internet Photonics and digital subscriber line gearmaker Catena Networks. It also managed to cut operating expenses by $10 million more than its projected goal. Its cash and investment holdings by the end of the quarter totaled $1.36 billion.

Going forward, Ciena’s new business plan will use the acquisitions to extend its product portfolio into digital subscriber line, fiber optic, storage extension and voice, video and data services.

“In fact, revenue from these new opportunities represented more than 35 percent of total revenue in the third quarter,” noted Ciena President and CEO Gary Smith, in a release. “We have taken a number of important steps toward restoring health and profitability to our business, and over the next several quarters, our focus and execution will be crucial for success.”

While it does anticipate future growth in its customer base and business, Ciena is projecting revenue for the fourth quarter will be roughly flat compared to the third, “reflecting ongoing customer uncertainty and caution,” Smith noted.

In related news, Ciena appointed Michael J. Rowny, chairman of Rowny Capital, to its board of directors as an independent director.