Mar. 12, 2014, 6:38 PM
- Goldman's upgrades of Infinera (INFN +14.9%) and Calix (CALX +2.8%) wound up sparking a broader rally telecom equipment and optical component makers. Notable gainers: FNSR +6.2%. UBNT +6.7%. CYNI +5.1%. CIEN +3.8%. JDSU +5.4%. AFOP +3.4%. NPTN +3.4%. ADTN +2.8%. FN +2.2%.
- Goldman's Simona Jankowski believes Infinera, which recently lost a major Verizon deal to Alcatel-Lucent, has regained Level 3 as a client. She also estimates 100G optical system shipments "have approximately a 15% point gross margin advantage" relative to 10G counterparts, and sees this delta boosting Infinera's margins as 100G "increases from mid-50% of total product revenue in 2013 to mid-70% in 2014."
- Regarding Calix, Jankowski reports seeing better spending trends among the tier 2/3 carriers the company leans heavily on, and thinks 2014/2015 estimates now "more accurately reflect" Calix's growth trajectory.
- Today's gains come as the optical networking industry's OFC 2014 conference continues. As usual, the conference has seen a slew of product launches. Ciena has followed Infinera (previous) in launching software tools for intelligently controlling a network's optical layers, and JDS Uniphase is showing off several new components and modules.
Jan. 31, 2014, 1:56 PM
- With help from an upgrade to Outperform from William Blair, JDS Uniphase (JDSU +6.9%) is shooting higher following its FQ2 beat, which was accompanied by strong FQ3 guidance and news of two acquisitions.
- Optical component peers Finisar (FNSR +4.5%), Oclaro (OCLR +5.7%), and NeoPhotonics (NPTN +6.5%) are following JDS higher. The fact JDS' optical communications product sales rose 12.1% Y/Y (up from 8.1% in FQ1) is likely going over well.
- Blair's Dmitry Netis is upbeat about JDS' improving carrier test equipment/software business: He expects it will return to positive growth in FQ3 after years of declines, grow 2.5% in FY14 (ends in June), and grow 9% in FY15.
- MKM (Neutral, PT upped to $15 from $13) observes rising 100G optical component demand (previous) is giving JDS a lift; Finisar and NeoPhotonics also have solid 100G exposure.
- Barclays is pleased FQ3 revenue is expected to grow 6% excluding a gesture recognition business affected by Xbox One/Kinect seasonality, but nonetheless considers Finisar a better investment due to its "cleaner" datacom exposure.
- CC transcript
Jan. 31, 2014, 9:09 AM
Jan. 30, 2014, 5:21 PM
- JDS Uniphase (JDSU) expects FQ3 revenue of $420M-$440M vs. a consensus of $425.9M.
- JDS also announces it's acquiring the assets of Trendium, a developer of analytics and customer experience optimization software for mobile carriers, and Time-Bandwidth Products, a maker of high-power lasers for industrial/scientific markets. Terms are undisclosed.
- Look for JDS to cross-sell Trendium's products to carrier test equipment customers. Carrier interest in advanced mobile analytics solutions has been growing in tandem with the mobile data/app boom. IBM made an acquisition in this space three months ago.
- JDS' FQ2 beat was driven in part by a gross margin of 48.5%, +220 bps Q/Q and +50 bps Y/Y. Optical communications product sales (39% of revenue) rose 12.1% Y/Y, and commercial optical sales (44% of revenue) 6.6%.
Jan. 30, 2014, 4:19 PM
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Jan. 22, 2014, 4:05 PM
- After reporting an EPS beat and in-line revenue this morning, Adtran (ADTN +4.5%) guided on its CC for Q1 revenue to be flat to down by a mid-single digit percentage Q/Q.
- Though the consensus is for revenue to be down less than 1% Q/Q to $158.8M, investors are taking heart in Adtran's forecast, given it follows warnings from several telecom equipment names.
- A slew of telecom equipment and component/chip vendors followed Adtran higher today. JDSU +3.1%. NPTN +4.6%. FNSR +2.3%. [CIEN] +2.1%. ALLT +2.6%. PKT +1.8%. CALX +1.7%.
Jan. 9, 2014, 12:59 PM
- Calix's Q4 warning, which has come in the wake of warnings (I, II) from fellow telecom equipment suppliers Cyan (CYNI -2.4%) and Procera (PKT -2.6%), has sparked a general selloff in telecom equipment and component/chip names. A Deutsche downgrade of Alcatel-Lucent, one of the best-performing names in the space in 2013, could also be playing a role.
- Calix, Cyan, and Procera all have considerable exposure to U.S. carriers not named AT&T or Verizon. While Calix didn't mention which region(s) are responsible for its warning, Cyan blamed an 88% Q/Q drop in sales to U.S. telco/top customer Windstream, and Procera blamed soft demand from U.S. cable providers.
- Notable decliners: CSCO -1.1% JDSU -5.2%. ADTN -5.1% (competes with Calix). FNSR -4.2% (just announced an acquisition). INFN -2.9%. AMCC -2.5%. CIEN -2.4%. BSFT -6.1%. SONS -2.1%.
- The group sold off a month ago after Cisco cut its long-term growth outlook.
Dec. 12, 2013, 11:51 AM
- Cisco (CSCO -2.3%) is now targeting annual revenue growth of 3%-6% over the next 3-5 years, down from a prior 5%-7%, says CFO Frank Calderoni states at the networking giant's analyst meeting. In addition, Calderoni says Cisco's FY14 (ends July '14) revenue growth outlook is "basically" in-line with a Street forecast for a 4% decline.
- Cisco is now aiming for services revenue growth of 7%-10% over the next 3-5 years, down from 9%-11%; services accounted for 22% of Cisco's Oct. quarter revenue. Businesses related to "enabling the cloud" (a somewhat nebulous term) are expected to show a 12%-18% growth rate.
- Cisco, already pressured by John Chambers' macro comments, continues to trade lower. Many networking equipment peers and component/chip suppliers are also selling off; in addition to Cisco, Ciena's mixed FQ4 results and slightly soft FQ1 guidance could be playing a role here.
- Notable networking equipment/component/chip decliners: JNPR -3.1%. BRCM -2.5%. PKT -2.8%. FFIV -2.2%. ERIC -2.1%. JDSU -1.9% (getting pulled from the S&P 500). AFOP -5.5%. CAVM -1.7%. AMCC -1.8%. BRCD -1.8%. MRVL -1.6%. ARUN -1.7%. CALX -1.7%.
Dec. 11, 2013, 5:24 PM
- Better a week late than never. Facebook (FB) will be joining the S&P 500 following the Dec. 20 close, and will also be added to the S&P 100. The social networking giant is replacing test equipment vendor Teradyne (TER).
- Alliance Data Systems (ADS) and Mohawk Industries (MHK) are also joining the S&P 500 following the Dec. 20 close. They're replacing Abercrombie & Fitch (ANF) and JDS Uniphase (JDSU).
- FB +3.9% AH. MHK +2.4%. ANF -0.8%. JDSU -0.6%.
Dec. 11, 2013, 9:24 AM
- JDS Uniphase (JDSU) is acquiring Network Instruments, a provider of network analysis/performance monitoring hardware for enterprises and data centers, for $200M in cash. The deal is expected to close within 45 days. (PR)
- Network Instruments competes with Riverbed's (RVBD) Opnet unit and NetScout (NTCT), among others; the deal could rekindle M&A hopes for the latter. Network Instruments had revenue of $40M over the last 12 months, and (per JDS) addresses $1B+ worth of markets growing at a 13% clip.
- JDS asserts Network Instruments' products complement its carrier-focused network analysis/monitoring products, and will help it create new offerings as "enterprise and carrier network performance management requirements converge."
- JDSU +0.7% premarket
Dec. 5, 2013, 4:44 PM
- Finisar (FNSR) is guiding for FQ3 revenue of $290M-$305M and EPS of $0.43-$0.47, above a consensus of $289.3M and $0.38.
- FQ2 results beat estimates thanks in large part to an 11% Q/Q and 46% Y/Y increase in datacom component sales to $204.3M (70% of total revenue); the Y/Y growth rate represents a solid increase from FQ2's 32%. Healthy data center infrastructure spending from Internet/cloud services firms likely played a big role.
- Telecom component sales totaled $86.5M, +6% Q/Q but -6% Y/Y. Major customer Cisco recently reported seeing soft telecom hardware orders.
- Gross margin was 37.1%, +200 bps Q/Q and +660 bps Y/Y. FQ3 GM is expected be around 37%.
- Opex rose 15% Y/Y; R&D, sales/marketing, and G&A spend each grew by a double-digit percentage.
- Aided by yesterday's FBR note, Finisar is now up 17% from Tuesday's close. JDS Uniphase (JDSU) is following its rival higher AH.
- CC at 5PM ET. FQ2 results, PR, presentation
Dec. 4, 2013, 2:59 PM
- FBR's Scott Thompson thinks Ciena (CIEN +7%) will deliver a beat-and-raise FQ4 report on Dec. 12, and sees the telecom equipment vendor benefiting from carrier adoption of network architectures that feature "more intelligence and flexibility at the optical layer."
- Thompson sees carriers building more advanced metro optical networks, replete with data centers that enable services such as content caching, app hosting, and advanced mobile messaging. He points to a recent optical switching deal between Verizon and Ciena as an example of how the latter benefits from this trend, and sees a similar deal with AT&T arriving soon.
- At the same time, he cautions optical gross margins "could be under pressure," thanks to aggressive pricing from Infinera (INFN +2%), lengthy deployment times, and the adoption of software-defined networking controllers (CYNI is among the companies providing them) that remove some intelligence from the optical layer.
- Ciena flew higher three months ago following its FQ3 report. The company reported solid demand for its integrated Ethernet switching/optical networking hardware, which now accounts for 56% of revenue.
- Infinera is following Ciena higher, and so are Finisar (FNSR +5.2%), JDS Uniphase (JDSU +3.1%), Fabrinet (FN +1.8%), and AppliedMicro (AMCC +3.9%).
Nov. 22, 2013, 1:51 PM
- MKM has lowered its PT for Finisar (FNSR -2.4%) to $27 from $30. Both Finisar and rival JDS Uniphase (JDSU -2.4%) have sold off over the course of the day.
- Though still up 27% YTD, Finisar is now down 22% from its October high of $26.66. Shares took off this summer after Finisar provided strong guidance on the back of rising datacom (enterprise/data center networking) orders. But both Finisar and JDS dove earlier this month after major customer Cisco provided bleak guidance, thanks in large part to service provider and emerging markets weakness.
- JDS is close to its 52-week low of $11.10. Finisar's FQ2 results are due on Dec. 5.
Nov. 19, 2013, 3:46 PM
Viavi Solutions Inc is a provider of network and service enablement solutions and optical products for telecommunications service providers, wireless operators, cable operators, network-equipment manufacturers and enterprises.
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