A one time tax benefit resulting from a corporate reorganization propped up Ciena’s (CIEN) net income in the latest quarter, masking what would otherwise be a significant deceleration in profitability. Ninety days ago, we told investors to expect an asset transfer that would make the third quarter appear stronger than it is.

In its latest 10-Q, Ciena revealed it transferred certain non-U.S. intangible assets as part of a corporate reorganization:

“...which created amortizable tax basis resulting in the discrete recognition of a $124.2 million deferred tax asset with a corresponding tax benefit.”

The tax benefit, according to our analysis, inflated Ciena’s third quarter reported net income 114%. Without the one time tax benefit, the company’s net income would have declined year-over-year to $111.3 million, or 21.7%.