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Finisar Corporation (NASD:FNSR) provides technology "for fiber optic subsystems and network performance test systems. These products enable high-speed data communications for networking and storage applications". The business is not without competition, including JDS Uniphase (NASD:JDSU), Bookham (BKHM), and Avanex (NASD:AVNX). However, Finisar has had the hot hand in the market over the last year. After dropping to $.79 in August 2005, the shares raced to $5.49 recently and now trade at $4.53.

Finisar's growth has been good but unprofitable. After revenue of $166.5 million in 2003 (April 30 fiscal), the topline rose to $185.6 million in 2004 and $280.8 last year. But, the operating loss over that period has been more than $270 million, including $88.6 million in fiscal 2005.

As the company entered the current fiscal year, revenue continued its pace. The July quarter revenue rose to $81.7 million, followed by $86.6 million in the October quarter. Finally, the the quarter that ended January 31, 2006 (fiscal Q3), revenue popped to $93.5 million and Finisar finally showed an operating profit of $1.5 million. Gross margins also improved to 30.2% from 22.8% a year earlier.

What happened? Well, it could be the the overall fiber optic market has really risen from the grave. At least it would appear to be the case. As the demand for fiber to the home and other applications grows, companies like Finisar stand to be direct beneficiaries. Companies like Verizon (NYSE:VZ) are expanding these networks at a tremendous clip and this is not likely to abate in the short-term.

The company's Q4 and year-end announcement on June 14 will tell the tale, but Wall Street should expect that the trend of rising revenue and a positive bottom line will continue.

FNSR 1-yr chart:

Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He is also the former president of Switchboard.com, which was the 10th most visited site in the world at the time, according to MediaMetrix. He has been chief executive of FutureSource LLC and On2 Technologies, Inc. and has served on the boards of TheStreet.com and Edgar Online. He does not own securities in companies he writes about. He can be reached at douglasamcintyre@gmail.com.

Source: Finisar's Smooth Move (FNSR)