Viavi Solutions Inc.NASDAQ
Viavi: SOTP Suggests Upside; M&A Reshuffling The Key Question
Thu, Aug. 11, 5:36 PM
Thu, Aug. 11, 4:02 PM
Wed, Aug. 10, 5:35 PM
Tue, May 3, 4:04 PM
- Viavi Solutions (NASDAQ:VIAV): FQ3 EPS of $0.09 beats by $0.01.
- Revenue of $220.4M (+3.8% Y/Y) beats by $2.02M.
- Expects FQ4 revenue of $212M-$228M and EPS of $0.08-$0.10 vs. a consensus of $230.7M and $0.10.
- Shares are unchanged after hours for now.
Mon, May 2, 5:35 PM
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Wed, Feb. 3, 1:32 PM
- Though the Nasdaq is down 1.5%, many telecom equipment and optical component firms are rallying after network test equipment/telecom software provider Viavi (VIAV +17.6%) and optical component vendor Oclaro (OCLR +11.4%) beat calendar Q4 estimates and issued strong Q1 guidance.
- The list includes optical networking hardware firms Ciena (CIEN +3.9%) and Infinera (INFN +4.9%), component vendors Finisar (FNSR +5.3%) and Alliance Fiber (AFOP +2.2%), Wi-Fi hardware provider Ruckus (RKUS +3.5%), and VoIP and 4G signaling hardware/software firm Sonus (SONS +2.5%).
- Component maker NeoPhotonics (NPTN +14.7%) is posting double-digit gains, aided by an upgrade to Strong Buy from Raymond James. RJ says its checks point to strong sales fueled by Chinese demand and 100G metro optical buildouts.
- Oclaro guided for calendar Q1 (FQ3) revenue of $97M-$100M, soundly above a $90M consensus. The FQ2 beat was fueled by a 21% Y/Y increase in 100G product sales (53% of total revenue), which offset a 7% drop in sales of 10G and lower-speed products (35% of revenue). (earnings release)
- Viavi's beat was aided by a 5.7% Y/Y sales increase for the company's core network enablement (test instrument) business. The unit delivered Y/Y sales growth for the first time in five quarters. (earnings release)
- Viavi and Oclaro's numbers came shortly after optical component contract manufacturer Fabrinet soared in response to an FQ2 beat and strong FQ3 guidance. Fabrinet's revenue from 100G programs nearly tripled Y/Y in FQ2.
Wed, Feb. 3, 10:33 AM
- Having gone into earnings just $0.35 above a 52-week low of $4.68, Viavi Solutions (VIAV +12.3%) is flying higher after beating FQ2 estimates and issuing strong FQ3 guidance - revenue of $210M-$226M and EPS of $0.07-$0.09 vs. a consensus of $212.8M and $0.07.
- Viavi, formerly JDS Uniphase's test equipment/network software arm, also announced it has named Oleg Khaykin, formerly a senior advisor at P-E firm Silver Lake, its new CEO, effective today. Khaykin's resume includes stints as the CEO of power management chipmaker International Rectifier (acquired by Infineon) and as the COO of chip packaging/testing firm Amkor.
- Khaykin is replacing Richard Belluzzo, who has been serving as interim CEO since August. Belluzzo will remain chairman.
- Also: A $100M buyback has been announced. It's good for repurchasing over 7% of shares at current levels.
FQ2 details: Optical security & performance product (OSP) sales rose 16.2% Y/Y to $58.8M. On its earnings call, Viavi stated strong demand from the anti-counterfeiting market lifted sales. Network enablement sales rose 5.7% to $136.4M, growing Y/Y for the first time in five quarters. Service enablement revenue fell 21.2% to $36.9M due to weak service assurance product demand.
Lifting EPS: GAAP operating expenses fell 14% Y/Y to $132.6M. Adjusted gross margin rose 10 bps Q/Q and 20 bps Y/Y to 63.7%. Viavi ended FQ2 with $926M in cash/investments and $575M in debt.
- Viavi's FQ2 results, earnings release
Tue, Feb. 2, 4:08 PM
- Viavi Solutions (NASDAQ:VIAV): FQ2 EPS of $0.11 beats by $0.04.
- Revenue of $232.1M (+2.5% Y/Y) beats by $11.82M.
Mon, Feb. 1, 5:35 PM
Dec. 10, 2015, 2:11 PM
- Ciena (CIEN -16.8%) has tumbled after issuing light FQ1 guidance to go with an FQ4 beat. In addition, the optical networking hardware vendor has guided for 8%-9% FY16 (ends Oct. '16) revenue growth, below a 13.8% consensus.
- With Ciena's outlook raising new fears about telecom capex (under pressure for a while), rival Infinera (INFN -3.3%) is also off, as are optical component vendors Lumentum (LITE -2.2%) and Alliance Fiber (AFOP -1.9%), VoIP/4G signaling infrastructure provider Sonus (SONS -1.6%), and network test equipment/software provider Viavi (VIAV -2%). The Nasdaq is up 0.7%.
- Northland Securities' Tim Savageaux has gone contrarian and upgraded Ciena to Outperform. He notes the company's FY16 outlook still implies an acceleration in organic sales growth (accounts for the Cyan acquisition) to over 7% from FY15's 3%, and calls the selloff an attractive entry point for buying an industry leader.
- Wells Fargo's Jess Lubert (Outperform rating) is also defending Ciena. "While we are disappointed by Ciena’s FQ1 and F2016 outlook, we sense the company’s forecast likely embeds conservative assumptions surrounding the Cyan business and the timing of revenue recognition on several large opportunities. That said, with Ciena having secured 100G metro deployments with many of the world’s largest carriers and likely to see improved mix further benefit margins, we remain positive regarding the company’s 2016/2017 prospects and see the potential for the current forecast to prove conservative if execution remains strong."
Earnings/guidance details: Ciena's FY16 op. margin is expected to be in a range of 11%-12% vs. 10.9% in FY15 before rising to ~15% in the next 3-4 years. Gross margin (non-GAAP) is expected to be in the mid-40s; it was at 44.9% in FQ4, -40 bps Q/Q and +700 bps Y/Y.
The company had two 10%+ customers in FQ4 (possibly AT&T and Verizon) that collectively made up 29.6% of revenue. Non-U.S. customers were 34.5% of revenue, and Cyan contributed $84.4M (12% of total revenue), primarily via its Z-Wave packet-optical (integrated optical networking/Ethernet switching) platform. Altogether, packet-optical products made up 70% of revenue, packet networking (Ethernet switches) 9.2%, optical transport 2.4%, and software/services 18.4%. (earnings release)
Nov. 3, 2015, 10:49 AM
- The former JDS Uniphase (NASDAQ:VIAV) is at its highest levels since September after beating FQ1 estimates with the help of strong optical security/performance (OSP) product sales. FQ2 guidance is for revenue of $212M-$228M and EPS of $0.06-$0.08, in-line with a consensus of $221.1M and $0.08.
- OSP revenue rose 27.1% Q/Q and 48.3% Y/Y in FQ1 to $64.2M. On the earnings call (transcript), the growth was attributed to growing banknote printing volumes for Viavi's anti-counterfeiting business, as well as higher government sales.
- Sales performance: Network enablement (NE) sales fell 11% Q/Q and 3.2% Y/Y to $117.6M. Wireline field instruments were weak (particularly for cable applications), while lab and wireless field instruments were stronger. Service enablement (SE) revenue rose 29.1% Q/Q and fell 5.1% Y/Y to $47.9M. Assurance and wireless sales were soft, while "growth areas" such as location intelligence and enterprise network instruments were stronger.
- NE book-to-bill was above 1, and SE book-to-bill below 1. The latter is blamed on assurance and location intelligence deal push-outs.
- Financials: Adjusted gross margin rose 100 bps Q/Q and fell 60 bps Y/Y to 63.6%. Non-GAAP operating expenses fell 6.1% Y/Y thanks to lower G&A spend, helping adjusted op. margin rise 650 bps to 12.5%. Viavi ended FQ1 with $903.1M in cash/investments, and $568.2M in long-term debt.
- FQ1 results, PR
Nov. 2, 2015, 4:04 PM
- Viavi Solutions (NASDAQ:VIAV): FQ1 EPS of $0.08 beats by $0.02.
- Revenue of $229.7M (+6.7% Y/Y) beats by $16.91M.
Nov. 1, 2015, 5:35 PM
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Oct. 28, 2015, 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."
Sep. 1, 2015, 4:50 PM
- Continuing the activist efforts it launched when the company was known as JDS Uniphase, Sandell Asset Management (5.1% stake) has called on Viavi (NASDAQ:VIAV) to launch a strategic review to maximize the value of its net operating losses (NOLs).
- Sandell notes remarks from CFO Rex Jackson indicating Viavi has $4B-$4.5B in federal NOLs alone. It argues Viavi could receive over $10/share in a buyout, and could be worth over $12/share if it transformed into a "tax-advantaged platform company."
- Shares rallied today in the face of a 2.9% Nasdaq drop. UBS recently estimated Viavi's NOLs totaled $4.5B, and that its deferred tax assets had a face value of $1.5B.
Aug. 13, 2015, 3:07 PM
- UBS' Amitabh Passi has launched coverage on the former/post-spinoff JDS Uniphase (NASDAQ:VIAV) with Buy rating and $7.50 target two days after it posted FQ4 results, issued FQ1 guidance, and announced CEO Tom Waechter has stepped down.
- Passi: "There are 3 key sources of debate on the name: a) quality of management, b) demand outlook in the test & measurement (T&M) business and c) value ascribed to the $4.5b of net operating losses, or [estimated] ~$1.5b of deferred tax assets (DTA). With the Viavi CEO having just resigned, we believe there is now an increased urgency and willingness by the Board to focus on execution excellence and stabilizing the business."
- He admits the outlook for JDS' network test/measurement equipment ops - they've seen double-digit sales declines - remains "challenged due to a combination of market transitions and execution issues." But Passi also thinks "excess cash, DTAs, as well as the healthy Optical Security Products group (OSP) limit downside." He "conservatively" ascribes a $1.15/share value due to the DTAs, compared with a ~$6/share face value. "Our [sum-of-the-parts] analysis therefore suggests a base case value for Viavi of ~$7.50/share, upside to $12/share and downside to $4.50/share."