- Ahead of Finisar's (FNSR -3.9%) Sep. 4 FQ1 report, MKM's Michael Genovese has respectively cut his revenue and EPS estimates for the quarter by $3M and $0.01, albeit while reiterating a Buy.
- Genovese predicts "soft 2HCY14 carrier capex and the mix shift to low margin Chinese sales is likely to result in fairly anemic Telecom revenue growth and limited [gross margin] expansion in the near term." But he's still upbeat about Finisar's datacom sales (boosted by Web data center buildouts), and thinks telecom sales "should improve in 2HCY15 as the 100G Metro market positively inflects."
- Likewise, RBC's Mark Sue is reiterating an Outperform, but offering cautious remarks. "Inventories are creeping upward, inventory lead-times are decreasing and there’s concern that current soft-pricing may continue or spread to higher speed products."
- Sue thinks Chinese competition is affecting pricing for "low-mid speed components," and suggests Finisar should slash capex and launch a buyback. Shares plunged in June due to light FQ1 EPS guidance that stemmed from margin pressure.
- A slew of other firms with strong telecom capex exposure are also trading lower. JDSU -1.8%. INFN -1.6%. CYNI -2.4%. AFOP -1.5%. CAVM -1.4%. ZHNE -1.6%. Juniper and multiple component vendors have already reported seeing soft near-term capex trends.
- For component vendors, a decent amount of bad news has been priced in since April.