Finisar’s quarterly revenue recovers further

For its fiscal second-quarter 2019 (ended 28 October 2018), fiber-optic communications component and subsystem maker Finisar Corp of Sunnyvale, CA, USA has reported revenue of $325.4m, down 2% on $332.2m a year ago but up 2.5% on $317.3m last quarter due to increased sales of wavelength-selective switches (WSS) and vertical-cavity surface-emitting laser (VCSEL) arrays for 3D applications.

On a non-GAAP basis, despite being down from 30.3% a year ago, gross margin was also up from 27.5% last quarter to 28.3% (above the expected 28%), due primarily to favorable product mix and continued focus on reducing manufacturing overhead.

Operating expenses (OpEx) have been cut from $74.6m (22.5% of revenue) a year ago and $68.3m (21.5% of revenue) last quarter to $63.6m (19.5% of revenue, already within the targeted operating model range of 18-20%). This was despite facility start-up costs rising from $7.6m last quarter to $11.4m, since R&D expenses have been cut from $63.1m to $52.7m. “We were able to accelerate the process of improving efficiencies and reducing relative operating expense levels faster than expected,” notes CEO Michael Hurlston.

Due to the combination of higher revenue, better gross margin and lower OpEx, operating income rose from $18.8m (operating margin of 5.9% of revenue) last quarter to $28.6m (8.8% margin, exceeding the expected 7-8%) – and above the $25.9m (7.8% margin) a year ago.

Likewise, net income has risen from $21.3m ($0.18 per diluted share) last quarter to $30.6m ($0.26 per diluted share, exceeding the expected $0.19-0.25), and above the $26.1m ($0.23 per diluted share) a year ago.

During the quarter, cash, cash equivalents and short-term investments rose by $11m, from $1.159bn to $1.17. This was despite higher-than-typical capital expenditure from continued progress on the new 700,000ft2 fabrication plant in Sherman, Texas (purchased in late 2017) for VCSEL arrays for 3D sensing applications (to expand Finisar’s manufacturing capacity for VCSELs using 6-inch wafers, compared with 4-inch wafers at the firm’s existing VCSEL fab in Allen, Texas), as well as construction and fit out of the third building at the firm’s manufacturing site in Wuxi, China.

Due to its proposed acquisition by engineered materials and optoelectronic component maker II-VI Inc of Saxonburg, PA, USA (announced on 9 November), Finisar has not provided forward guidance for fiscal third-quarter 2019.

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Tags: Optical communications Finisar

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