Wed, Oct. 28, 1:42 PM
- Optical component vendors NeoPhotonics (NPTN +12.6%), Oclaro (OCLR +9.4%), Viavi (VIAV +6.9%), Finisar (FNSR +3.8%), Alliance Fiber (AFOP +4%), and Fabrinet (FN +3.1%) are rallying after optical transport hardware vendor Infinera (INFN +14.6%) beat Q3 estimates and issued strong Q4 guidance. Infinera rival Ciena (CIEN +3.4%) hit yesterday by a bearish Off Wall Street report, is also doing well.
- For Oclaro, the shoe is now on the other foot: Infinera rallied last week after Oclaro pre-announced strong calendar Q3 sales.
- On the earnings call (transcript), CEO Tom Fallon stated Infinera saw "a substantive increase" in sales of its Cloud Xpress data center interconnect platform. Cloud Xpress customers now stand at 14 (up from 12 as of July), and growing machine-to-machine traffic within data centers is expected to boost demand for 100G interfaces. Infinera's core long-haul system sales were also healthy.
- Fallon did admit Infinera is seeing "some conflicting signals" regarding market demand. "On one hand, we are seeing some pockets of slightly softening demand. On the other, we're seeing positive indications in the industry, such as lead-times extending for optical components and continued capacity expansion from cloud providers." The optical component remarks might be contributing to today's rally in component makers.
- Needham's Alex Henderson, who upgraded Infinera earlier this month, is reiterating a Buy rating today. "Infinera reported a strong quarter and offered a strong guide in its first quarter with Transmode partially in the base and fully in the CY4Q guidance. Negative commentary on the Street on INFN and CIEN regarding industry price pressure has set-up a solid entry point and we expect investors will take advantage of this recent weakness."
Fri, Sep. 11, 12:45 PM
- Finisar (FNSR -18.4%) has plunged to its lowest levels since 2012 after missing FQ1 estimates, providing soft FQ2 guidance, and announcing chairman Jerry Rawls is replacing Eitan Gertel as CEO.
- Optical component/module peers Alliance Fiber (AFOP -4.6%), Lumentum (LITE -2.3%), and Oclaro (OCLR -6%) are also off, as are equipment vendors Infinera (INFN -3.8%), Ciena (CIEN -2.8%), Adtran (ADTN -2.3%), and Calix (CALX -2.5%). The Nasdaq is nearly flat.
- During Finisar's earnings call (transcript), Rawls noted his company continues to "see a high level of competition," and is aiming to cut operating expenses to ~20% of revenue from FQ1's 21.8%. CFO Kurt Adzema mentioned wireless and legacy 100G datacom component sales were soft in FQ1, and that Finisar is now seeing "some lumpiness" for 40G data center sales.
- Adzema insisted the competition (much of it around low-end/10G products) is business as usual. "The lower end products always [face] competition from non-tier 1 companies and in some period of time, it just takes whether it’s a one year or a three year or whatever the period, tier 2 competitors always catch up." Rawls promised 25G/100G Ethernet data center upgrade cycles would drive growth next year.
- MKM and B. Riley have downgraded Finisar to Neutral, and several other firms have cut targets. MKM's Michael Genovese cites datacom competition/price pressure, and states he's "becoming less convinced that there is an easy path to industry consolidation that will help alleviate ... significant Optical component industry challenges,"
- At the same time, Genovese defends Ciena, Infinera, and Lumentum (formerly JDS Uniphase's component unit). "Ciena and Infinera actually slightly benefit from more [component] competition and lower prices since they are customers ... we believe the negative revisions in Finisar's outlook are much more on the Datacom side than on the Telecom side ... Finisar is an incumbent that derives 75% of overall revenues from Datacom, while Lumentum is a relatively new challenger with only 20% of revenues from Datacom ... we are much more confident in the demand and pricing environments for 100G Telecom (Metro and [long-haul]) components than we are for Datacom, and Lumentum has significantly more exposure to 100G Telecom than Finisar."
Fri, Sep. 11, 12:44 PM
Fri, Sep. 11, 9:11 AM
Thu, Sep. 10, 5:36 PM
Thu, Sep. 10, 4:10 PM
- Along with its FQ1 results, Finisar (NASDAQ:FNSR) announces CEO Eitan Gertel has resigned. Chairman Jerry Rawls (70) is once more Finisar's CEO - he previously held the job from 1999-2008 before stepping down to make way for Gertel (52). Rawls will remain Finisar's principal executive.
- In addition to missing FQ1 estimates, Finisar is guiding for FQ2 revenue of $304M-$324M and EPS of $0.20-$0.26, below a consensus of $328M and $0.28.
- Segment performance: Datacom optical component/module revenue fell 3.6% Q/Q and 3.3% Y/Y in FQ1 to $233.3M; sales were up 8.5% Y/Y in FQ4. Telecom component/module revenue fell 1.9% Q/Q and 6.6% Y/Y to $80.7M. Q/Q growth was hurt by one fewer week.
- Financials: Gross margin was 30.2%, -10 bps Q/Q and -180 bps Y/Y, and slightly below guidance of ~30.5%; FQ2 GM guidance is at.~30% Operating expenses fell by $1M Y/Y to $68.4M. Finisar ended FQ1 with $495.7M in cash/short-term investments, and $223.7M worth of convertible debt.
- Shares have fallen to $13.65 after hours.
- FQ1 results, PR, earnings slides (.pdf)
Thu, Sep. 10, 4:02 PM
Wed, Sep. 9, 5:35 PM
Fri, Jun. 19, 10:07 AM
- Up in AH trading yesterday after providing in-line FQ1 guidance to go with nearly in-line FQ4 results, Finisar (NASDAQ:FNSR) has tumbled out of the gate today. Raymond James has downgraded to Outperform from Strong Buy.
- Likely weighing: On the CC (transcript), CEO Eitan Gertel mentioned FQ1 gross margin growth - Finisar expects GM to rise 20 bps Q/Q to 30.5% - will be limited by "the impact of increased competition."
- When asked on the Q&A about this, chairman Jerry Rawls stated the competition is in the datacom market, and particularly the cloud data center segment that has been a major growth driver. "The hyperscale data centers are a little bit different than enterprise in that they often will accept products that are good enough and don't necessarily have to meet all of the industry specifications ... they will accept offerings from less than Tier-1 companies and so there is a bit more competitive pressures that go into that space and so – but nevertheless we expect to maintain our market share."
- The company was more positive about 100G optical component/module sales, where competition is less intense and both telecom and (increasingly) hyperscale demand are providing a lift. Rawls: "[W]e'll start seeing much more 100-gig, 4x25-gig in data centers. And I think it will be really exciting into calendar year 2016." For now, 100G sales remain less than 10% of revenue.
- FQ4 results, guidance/details
Thu, Jun. 18, 4:26 PM
- In addition to meeting FQ4 EPS estimates and posting nearly in-line revenue, Finisar (NASDAQ:FNSR) is guiding for FQ1 revenue of $308M-$328M and EPS of $0.23-$0.29, in-line with a consensus of $318M and $0.27.
- Segment performance: Datacom revenue (boosted by Web/cloud data center spending) +3.2% Q/Q and +8.5% Y/Y to $242M. Telecom revenue (hurt by soft industry capex and price cuts) +8.6% Q/Q and -6% Y/Y to $78.1M. Q/Q growth benefited from an extra week.
- Financials: Gross margin +30 bps Q/Q and -90 bps Y/Y to 30.3%; FQ1 GM guidance is at ~30.5%. Operating expenses (non-GAAP) +3.4% Y/Y to $68.2M; on a GAAP basis, R&D spend totaled $51.1M, sales/marketing $11.8M, and G&A $15.3M. Finisar ended FQ4 with $490.2M in cash/investments, and $221.4M in convertible debt.
- Shares have risen to $22.69 AH. The 52-week high is $23.38.
- FQ4 results, PR, slides (.pdf)
Thu, Jun. 18, 4:02 PM
Wed, Jun. 17, 5:35 PM
Sun, Mar. 29, 7:39 PM
- Optical component industry consolidation "was a common topic of discussion among investors and companies" at the industry's recent OFC conference, reports Piper's Troy Jensen. "The reasons for consolidation are well known and center on operational expense savings, a more rational pricing environment, and more complete product lines."
- One deal that's viewed as especially likely: A Finisar (NASDAQ:FNSR) purchase of JDS Uniphase's (NASDAQ:JDSU) optical component/laser unit (CCOP), currently set to be spun off as Lumentum Holdings in Q3. Activist Sandell Asset Management has been urging JDS to sell CCOP, which had FY14 (ended June '14) revenue of $794M (+7% Y/Y). Jefferies' James Kisner thinks a deal could happen, but not before the spinoff occurs.
- Jensen on industry consolidation in general: "The question isn't really an if, but more of the urgency of potential sellers and buyers and also at what price a deal would take place. In general, our feeling is that investors were slightly more anxious for a deal, while companies we spoke with sensed the need for consolidation, but were less anxious."
- The industry has already seen a decent amount of M&A. In addition to CCOP, smaller component vendors Oclaro (OCLR - $213M market cap), Alliance Fiber (AFOP - $308M market cap), Applied Optoelectronics (AAOI - $196M market cap), and NeoPhotonics (NPTN - $217M market cap) could be targeted. NeoPhotonics has soared since delivering a big Q4 beat (fueled by strong 100G component demand) on March 3.
Wed, Mar. 25, 3:57 PM
- With the Nasdaq down 2.3%, only a handful of tech companies are posting 2%+ gains. Meanwhile, the ranks of those posting 4%+ losses are considerable.
- Notable decliners include telecom/networking chipmakers Broadcom (BRCM -5.3%) and PMC-Sierra (PMCS -4.4%), chip equipment giant Applied Materials (AMAT -5.5%), optical component vendor Finisar (FNSR -6.7%), smart grid hardware/software vendor Silver Spring (SSNI -7.9%), Chinese app developer Cheetah Mobile (CMCM -4.4%), cable infrastructure/set-top vendor Arris (ARRS -4.8%), server OEM Super Micro (SMCI -5.8%), IP licensing firm Finjan (FNJN -13.8%), and cloud life sciences software leader Veeva (VEEV -5.7%).
- Broadcom, PMC-Sierra, and Applied Materials have joined a slew of other chip industry names in posting steep losses. Finjan is reversing yesterday's big gains. Cheetah Mobile, which sold off post-earnings last week, announced today's it's the lead investor in a $24M funding round for social/mobile ad platform Nanigans; the move follows the $58M purchase of French mobile ad network MobPartner.
- Previously covered: Solar stocks, Mobileye, GoPro, Groupon, On Track, Netlist, Baidu/Qihoo, AMD, Yingli, Lexmark/Kofax
Fri, Mar. 6, 9:15 AM
Thu, Mar. 5, 5:37 PM
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