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."
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
Thu, Mar. 5, 4:27 PM
- Though its FQ3 results were nearly in-line, Finisar (NASDAQ:FNSR) is guiding for FQ4 revenue of $310M-$330M and EPS of $0.22-$0.28, mostly above a consensus of $307.9M and $0.23. Compared with FQ3, FQ4 results will benefit from an extra, but be hurt by the timing of the Chinese New Year.
- Datacom revenue rose 8.5% Q/Q and 11.4% Y/Y to $234.4M, lifted by strong wireless transceiver and 40G/100G component demand; Internet data center buildouts likely boosted the latter. Telecom revenue (under pressure for a few quarters) fell 11.3% Q/Q and 14% Y/Y to $71.9M. In addition to weak carrier capex, the Q/Q drop was caused annual price cuts.
- Operating expenses rose 3% Y/Y to to $63.2M (compares with 4% revenue growth). Gross margin fell to 30% from 31.1% in FQ2 and 37.2% a year earlier (price pressure). FQ4 GM guidance is at 30%.
- Finisar is up to $21.35 AH. Rival JDS Uniphase (NASDAQ:JDSU) is following Finisar higher, rising to $13.51.
- Finisar's FQ3 results, PR, earnings slides (.pdf)
Thu, Mar. 5, 4:02 PM
Wed, Mar. 4, 5:35 PM
Thu, Feb. 12, 11:03 AM
- Cisco (NASDAQ:CSCO) beat FQ2 estimates on the back of 8% Y/Y product growth (aided by favorable comps), offered in-line guidance (better than feared, given forex pressures), and reported a 5% increase in product orders. Enterprise, SMB, and public sector orders respectively rose 10%, 8%, and 7%, and service provider orders dropping 1% (compares with a 10% FQ1 service provider drop).
- Cisco still isn't modeling a rebound in service provider or emerging markets demand for several quarters, and forecasts global service provider capex will be down by a mid-single digit % in 2015. But it's more optimistic about enterprise, public sector, U.S., and EMEA demand.
- Telecom and networking equipment vendors, many of whom have been hit hard by capex pressures, are rallying following Cisco's numbers, as are a couple of component/chip suppliers. The Nasdaq is up 0.7%.
- Notable gainers include Alcatel-Lucent (ALU +4.7%), Aruba (ARUN +3.4%), Ruckus (RKUS +5.1%), Sonus (SONS +3.4%), Extreme Networks (EXTR +3.4%), Brocade (BRCD +1.9%), Adtran (ADTN +3%), Infoblox (BLOX +2.7%), Finisar (FNSR +2.1%), Cavium (CAVM +2%), Ixia (XXIA +1.9%), and Mavenir (MVNR +3.4%).
- Cisco's 18% Y/Y wireless product sales growth appears to be going over well with Aruba and Ruckus investors, and its 11% switching growth with Extreme and Brocade investors.
Fri, Jan. 30, 2:56 PM
- Optical networking/carrier Ethernet hardware vendor Ciena (CIEN -4%), optical component suppliers Finisar (FNSR -2.4%) and Oclaro (OCLR -2%), and telecom chipmakers AppliedMicro (AMCC -5.9%) and Cavium (CAVM -4.4%) are all off after component vendor JDS Uniphase (JDSU -7.4%) missed FQ2 estimates and provided soft FQ3 guidance.
- On its CC (transcript), JDS observed its FQ2 network enablement (test equipment) and service enablement (telecom software/services) revenue fell a combined 8% Y/Y due to "weaker carrier spending and no budget flush in historically stronger December quarter." Network enablement is expected to remain soft in seasonally weak FQ3 as customers weigh their 2015 spending plans. Service enablement is expected to grow ~24%, after growing 16.6% in FQ2.
- AppliedMicro is down 10% since providing a soft FQ4 EPS guidance (-$0.09 vs. a -$0.07 pre-earnings consensus) on Tuesday afternoon to go with an FQ3 beat. Cavium is giving back the gains it saw yesterday after beating Q4 estimates and providing strong Q1 guidance.
Fri, Jan. 23, 10:32 AM
- Infinera (INFN +17.7%) knocked the cover off the ball yesterday afternoon, soundly beating Q4 estimates and issuing strong Q1 guidance on the back of growing demand for its DTN-X optical transmission/switching platform for 100G deployments.
- Rival Ciena (CIEN +3.7%) and optical component vendors JDS Uniphase (JDSU +2.7%) and Finisar (FNSR +2.3%) are rallying in response. The companies followed equity markets higher yesterday after Verizon guided for its 2015 capex to be slightly above 2014 levels (contrasts with AT&T's planed capex cut).
- On its CC (transcript), Infinera said it added 10 new invoiced DTN-X customers in Q4 (3 new to Infinera altogether), raising its total to 59, and that nearly half of all DTN-X clients are now opting for the company's Instant Bandwidth rapid provisioning tech. Initial revenue for the Cloud Xpress point-to-point interconnect platform was received in December, and 8 customer commitments have been received to date.
Dec. 4, 2014, 4:33 PM
- Finisar (NASDAQ:FNSR) expects FQ3 revenue of $297M-$312M and EPS of $0.23-$0.27, below a consensus of $323.9M and $0.28.
- FQ2 datacom revenue totaled $215.9M, +6% Y/Y but -10% Q/Q thanks to declining wireless transceiver sales and "lumpy order patterns" from several customers. Telecom revenue remained pressured by weak carrier capex, falling 6% Q/Q and Y/Y to $81.1M.
- Gross margin fell to 31.1% from 32% in FQ1 and 37.1% a year ago. Opex fell 3.1% to $67.3M.
- Low expectations - shares were down 27% YTD going into earnings - are limiting Finisar's AH drop for now.
- FQ2 results, PR, slides (.pdf)
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