14 March 2011

NeoPhotonics grows for 8th year to record $184.1m revenue

For fourth-quarter 2010, NeoPhotonics Corp of San Jose, CA, USA has reported record revenue of $51.3m, up 9% on $47.2m in Q3/2010 and up 19% on $43.1m a year ago as demand for products to support network upgrades globally more than offset typical seasonality. This boosted full-year revenue to a record $184.1m, up 19% on 2009’s $155.1m (the firm’s 8th consecutive year of growth).

NeoPhotonics is a vertically integrated designer and manufacturer of photonic integrated circuit (PIC)-based components, modules and subsystems for bandwidth-intensive, high-speed communications networks. Products include III-V-based active semiconductor, silica-based passive PLC (photonic lightwave circuit) and silicon-based MEMS (micro-electro-mechanical system) multi-dimensional switching functions in a single product, with integration enabled by nanomaterials and nanoscale design and fabrication technologies. The firm has ISO 9001:2000 certified engineering and manufacturing facilities in both Silicon Valley and Shenzhen, China.

“Our strong financial performance demonstrates the positive demand we are seeing for our PIC-based technologies and products with the world’s largest network equipment manufacturers,” says chairman, president & CEO Tim Jenks.

“The rapid growth of content, including HD and 3D video, music, social networking, video conferencing and other multimedia, delivered over the wireless and wireline networks is driving a rapidly increasing demand for bandwidth,” Jenks comments. “The demand for bandwidth is further intensified by the proliferation of network-attached devices, including tablet computers, that are enabling consumers to access bandwidth-intensive content anytime and anywhere over fixed and wireless networks, including 3G and LTE networks,” he concludes.

NeoPhotonics says that in 2010 it made significant progress qualifying new PIC-based product designs, ending the year with 97 cumulative, multi-year product family design-wins to its tier-one customer group (an increase of 17 product family design-wins since the end of 2009). The tier-one customer group includes each of the world’s largest network equipment manufacturers, which collectively comprise about 90% of the global market for network equipment.

Of NeoPhotonics’ ‘speed and agility’ PIC-based and other products (supporting transmission speeds of 10Gbps and above) as well as xOADMs and drop modules, in 2010 the firm launched both 40 and 100Gbps versions of an integrated coherent receiver using its proprietary hybrid PIC technology. It also launched a PIC-based 40Gbps optical demodulator for high-speed direct detection systems. Commercial shipments of both started in Q4/2010.

Of NeoPhotonics’ ‘access’ PIC-based and other products providing high-bandwidth connections over fixed and wireless networks — including fiber-to-the-home or fiber-to-the-premise (FTTx) networks — in 2010 the firm launched a pluggable version of its optical line terminal transceiver for the central office (which allows carriers to add bandwidth capacity by ‘hot plugging’ the product into a system line-card that may not have been fully populated at installation). It also launched a compact pluggable transceiver that integrates two fast Ethernet or gigabit Ethernet transceivers into the same form factor (allowing network equipment manufacturers to double the port density on line-card solutions). Commercial shipments of both started in Q4/2010.

On a non-GAAP basis, gross margin rose from 28.8% in 2009 to 31.7% for 2010. However, gross margin for Q4/2010 is down from 36% a year ago and 30.9% in Q3 to 28.3%, due mainly to negotiations completed with certain customers resulting in a decrease in product prices for those customers, excess and obsolete inventory expenses associated with certain products that were discontinued in the quarter, and an increase in the payroll tax rate in China. Quarter-to-quarter variability in gross margins is expected to continue, comments the firm.

Net income rose from just $0.3m in 2009 to $8.6m for 2010. However, although up from $1.2m in Q3, net income of $1.7m in Q4 almost halved from $3.3m a year ago.
After the end of the quarter, this February NeoPhotonics completed an initial public offering of common stock, raising gross proceeds of $94.9m (before underwriting commissions and offering expenses).

For first-quarter 2011, NeoPhotonics expects revenue of $44–47m, and non-GAAP gross margin of 28–30% and net income of break-even to –$0.8m.

Tags: NeoPhotonics PICs

Visit: www.neophotonics.com

Join Semiconductor Today's LinkedIn networking and discussion group