5 March 2012

Finisar’s quarterly datacom sales growth offsets drop for telecoms sales

For its fiscal third-quarter 2012 (to 29 January), fiber-optic communications component and subsystem maker Finisar Corp of Sunnyvale, CA, USA has reported revenue of $243m, down 7.6% on $263m a year ago but up a further 0.6% sequentially on $241.5m last quarter. This was driven by sales of datacom products rising by $5.1m (4%) to $133.7m, partially offset by telecom product sales falling by $3.7m (3.3%) to $109.3m. In particular, sales of ROADMs (reconfigurable optical add/drop multiplexers) were relatively flat.

On a non-GAAP basis, gross margin was down from 34.7% a year ago but fell only slightly from last quarter’s 32.1% to 31.8%, due to the impact of one month of the annual price reductions for telecom products (which typically take effect on 1 January, but were at the high end of the typical 10-15% range). This was partially offset by favorable a product mix, including the sale of additional 10G and 100G datacom transceivers.

“We held operating expenses below plan [$53.3m, down from $53.8m last quarter], so that operating income and operating margin increased relative to the preceding quarter,” says executive chairman Jerry Rawls. Although down on $44.7m (an operating margin of 17% of revenue) a year ago, operating income rose from $23.6m (9.8% of revenue) last quarter to $24m (9.9% of revenue). Likewise, although down on $42.5m a year ago, net income rose from $21.5m to $21.9m.

Despite this, during the quarter, cash and cash equivalents fell from $228m to $218.3m, due mainly to increases in accounts receivable (by $8.1m) and inventory (by $10.6m, driven primarily by lower-than-expected revenue from telecom products) as well as a decrease in accounts payable (by $4.8m).

“We continued to execute well on our product development plan and have delivered to customers a number of new innovative products," says CEO Eitan Gertel. "Production of our 100G Ethernet transceivers and tunable XFP transceiver products continued to ramp during the quarter. In addition, we have started the qualification process for our high-port-count [1x23] wavelength selective switch (WSS) [ROADM] modules with multiple customers,” he adds. “In our parallel-optics product line we continue to see significant traction with several key OEM customers for our optical engine product for use in next-generation switches, servers, and supercomputers. In addition, we are seeing continued strong demand for our QSFP transceivers including both SR4 and LR4 components.”

For its fiscal fourth-quarter 2012 (to end-April), Finisar expects flat revenue of $235-250m, with datacom sales flat or up but telecom sales down due to a full three months of the annual telecom price reduction. Gross margin should fall slightly to 31% due to the price declines and the product mix (of more datacom sales and less telecom sales). Operating expenses will be relatively flat at about $54m, yielding operating margin of 8.0-9.5%.

“Near-term telecom carrier spending remains sluggish, but ultimately these telecom service providers will have to spend more on optics and bandwidth expansion as their networks are filled to capacity,” comments Rawls. “When this happens, we believe that Finisar is uniquely positioned with our brought product line, extensive customer engagements, profitable vertically integrated business model and strong balance sheet to capitalize on the opportunities.”

See related items:

Finisar’s revenue grows 5.8% quarter-on-quarter to $241.5m

Finisar’s quarterly revenue falls 3.7% to $228.2m

Finisar reports annual revenue up 50.6% to record $948.8m for fiscal 2011

Finisar grows 57.6% year-on-year to record quarterly revenue of $263m

Finisar’s quarterly revenue up 16% to record $240.9m

Tags: Finisar

Visit: www.finisar.com