News

27 May 2009

 

Opnext’s 40Gb/s spike compensates for 10Gb/s inventory burn-off

After a drop in sales of 12% the previous quarter, for its fiscal fourth-quarter 2009 optical module and component maker Opnext Inc of Eatontown, NJ, USA has reported sales of $83.6m, up 15% on $72.7m a year ago and 18.6% on $70.5m last quarter.

In particular, sales of 40Gb/s products rose by $34.6m to $39.7m. However, this was due largely to the acquisition of StrataLight Communications Inc of Los Gatos, CA, USA on 9 January. Sales of 10Gb/s and below products fell in all major product categories except XFP (down 31.3%, from $60m to $41.2m). Sales of industrial and commercial products halved to $2.7m. Excluding $37.8m from StrataLight, sales were $45.8m (down 35% on last quarter’s $70.5m).

Net loss was $118.8m, compared to $14.5m last quarter and net income of $0.9m a year ago. However, excluding non-cash charges and costs related to the StrataLight acquisition and stock-based compensation and class-action-related litigation expenses, non-GAAP net loss was $18.5m.

During the quarter, cash and cash equivalents fell from $206m to $168.9m, due mainly to using $26.2m for the StrataLight acquisition. Cash used in operations was $13.1m.

“During our fourth quarter, we continued to see deteriorating demand from our customers, in part due to their efforts to manage inventory levels in this difficult economic environment,” says president & CEO Gilles Bouchard. “In this light, the actions announced on 1 April were designed to address our fixed cost structure and are critical to Opnext’s ability to restore profitability and positive cash flow from operations.” Opnext announced plans to reduce its cost structure and operating expenses involving: a cut of about10% in its workforce of about 800; a 10% cut in executive salaries and directors’ cash compensation; a 5% cut in salaries for other staff; the elimination of cash bonuses for fiscal 2009 and salary increases in the current fiscal year; and suspension of the firm’s matching contribution to the 401(k) plan. When fully implemented by year-end, these actions are expected to contribute total annualized savings of about $25m.

“We remain focused on cash preservation and working capital management, execution of our fixed cost reductions, supply chain actions to reduce variable costs, and closure of critical design wins, while continuing to invest in future products and technologies,” says Bouchard. “We are confident we will emerge from this downturn as a stronger company, better positioned in the industry… as we address demands for greater bandwidth and higher network speeds,” he adds.

“We expect our June quarter [fiscal first-quarter] to reflect continued market softness,” Bouchard cautions. “While we foresee some rebound in 10G sales as the effects from inventory adjustments taper off, we also anticipate that 40G sales will return to more normalized levels after the spike in demand in the March quarter following a major product transition.” Overall revenue should be steady at $80-90m.

See related items:

Opnext’s revenues fall 12% from last quarter

Opnext completes StrataLight acquisition

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