Finisar reports positive third quarter

10 Mar 2015

Telecoms revenues continue to slide but datacom sales lifts bellwether optical systems developer.

Finisar, Sunnyvale, CA, USA, a developer of systems and components for fiber optic communications, has announced on March 5 2015 an upturn in business performance during its third quarter of fiscal 2015, which ended January 25.

Jerry Rawls, the company’s Executive Chairman, said, “Revenues for our third fiscal quarter were $306.3m, up $9.3m over the prior quarter. Growth was primarily driven by the demand for 40 and 100 gigabit transceivers for datacom applications, as well as transceivers for wireless applications."

Eitan Gertel, Finisar's Chief Executive Officer added, “Although our gross margins declined primarily as a result of our annual telecom price reductions and low yields on a new optical engine product, we have significantly reduced our operating expenses, lowering the impact on earnings."

Highlights for Q3

• Revenues increased to $306.3m, up $9.3m, or 3.1%, from $297.0m in the preceding quarter.
• Sales of products for datacom applications increased by $18.5m (8.5%) against Q2.
• Sales of products for telecom applications decreased by $9.2m (11.3%) against Q2.
• Non-GAAP gross margin decreased to 30.0% from 31.1% in Q2, primarily due to the impact of one month of the annual telecom price reduction and impact of substantial yield loss for a new optical engine product for supercomputing applications.
• Non-GAAP opex fell $2.2m to $65.1m from $67.3m in Q2
• Non-GAAP operating income rose $1.9m to $26.9m, or 8.8% of revenues, compared to $25.0m, or 8.4% of revenues, in Q2.
• Cash and short term investments up $11.4m to $488.9m, compared to $477.4m at the end of Q2.

Q4 forecast

The company indicated that for the fourth quarter of fiscal 2015 it expects revenues in the range of $310 to $330m, gross margin of approximately 30%, operating margin of approximately 8% to 9%, and earnings per diluted share in the range of approximately $0.22 to $0.28 (all figures non-GAAP).

Capital expenditures are expected to be approximately $35m in Q4, primarily driven by the continued construction of the second building in Finisar’s Wuxi, China factory. Adzema commented, “We expect the second building to be completed by the end of the fourth quarter and we expect to have all remaining volume manufacturing move from Shanghai to Wuxi and requalified with the customers by the end of our second quarter of fiscal 2016.”

Asked by an analyst about the frequently-discussed issue of consolidation in the optical telecoms supply industry and whether Finisar would like to make a strategic acquisition to expand its portfolio or reduce competition, Jerry Rawls, Executive Chairman, commented, “Any consolidation move could accomplish any one of those things or multiple of them. The more of the factors that could make a positive contribution through some acquisition, would makes it more attractive, and could mean there is more value there.”

About the Author

Matthew Peach is a contributing editor to optics.org.