& cplSiteName &

Bit Parts: Following the Optical Money

Carolyn Mathas
News Analysis
Carolyn Mathas
5/13/2014
100%
0%

It's earnings season -- and it's always M&A season -- so there's plenty of financial action among the optical components firms such as Avago, JDSU, and Oclaro, as well as general industry news, including developments in the UK.

  • Avago Technologies Pte. has completed the $6.6 billion all-cash acquisition of LSI Corp., a deal first announced in December 2013. Avago, which replaces LSI on the S&P 500, will announce its second-quarter financial results on Thursday May 29. The company's stock is currently trading at a near year-high of $69.13. (See Avago to Buy LSI for $6.6B.)

  • JDSU (Nasdaq: JDSU; Toronto: JDU) has been engaging in a bit of damage control following its disappointing earnings report, announcing that its laser unit booked record orders in the last financial quarter. Laser sales at $30.9 million were up by more than 17% year-on-year, with the company noting strong demand for its Gen 2 fiber laser and solid state lasers, while the company is positive about the future demand for the high-power lasers it added to the portfolio with the acquisition in January of Time-Bandwidth Products. But lasers only account for about 7% of the company's revenues, and sales in other parts of the business didn't match expectations. While there are hopes that JDSU's numbers will improve as the year goes on, the share price isn't reflecting any such anticipation, as it is languishing at just above $11.00, not far above the year low of $10.29. (See Capex Slowdown Slams JDSU.)

  • Oclaro Inc. (Nasdaq: OCLR) shares took a hammering last week, losing about 40% of their value to hit $1.46, after the company reported a fiscal third-quarter net loss of $22.9 million on revenues of $95.1 million. The loss looks weighty, but it was an improvement on the $40 million net loss reported a year earlier. In an investors' conference call, CEO Greg Dougherty, who took over in June 2013, admitted the company hasn't integrated its acquisitions well, or made hard product line decisions. The company's workforce has dropped from approximately 3,000 last June to about 1,400 now, but it plans on hiring some new staff to bolster its 100G product developments. The company also been investing in its indium phosphide (InP) facility in Caswell, UK, and introduced a new pilot production line so that it can ramp such new products as InP-based tunable laser assemblies even faster. Oclaro's stock is currently trading at $1.78. (See Oclaro Makes Changes at the Top.)

  • Finisar Corp. (Nasdaq: FNSR) has been attracting some interesting investment attention. On May 7 traders bought 12,414 put options on the stock, more than five times the daily average of 1,991. Buying a put option protects an investor's existing stock position or acts as insurance if an investor believes the price will drop. Analyst firms have varying opinions on the stock: RBC Capital upgraded the shares from a "sector perform" to "outperform" in late March, while ACI Research downgraded shares to a "sell" rating three weeks earlier. While analyst opinions being varied is nothing really new, the put volume is… Finisar's share price currently stands at $23.06.

  • A new National Dark Fibre Infrastructure Service (NDFIS) funded to the tune of £2.5 million ($4.2 million) by the Engineering and Physical Research Council (EPSRC) will enable a consortium of UK universities to access a dark fiber network via dedicated optical connections. Expectations are that research experiments can more easily take place in such areas as high-order optical modulation or quantum communication. A five-year contract for NDFIS was awarded to a consortium including University College London, and the Universities of Southampton, Cambridge and Bristol. The resulting SDN network, named Aurora2, will also be open to industry partners to test architectures, new communications methods, and new components.

  • UK-based Fibercore Ltd. just unveiled what it claims to be a unique fabrication capability for multicore optical fibers, allowing for virtually any practical configuration, spacing and number of cores. Data cables for data center and exchange use, for example, are traditionally space guzzlers. With Fibercore's method, the cross sectional cable area can be reduced in size by having eight cores within one fiber, replacing an eight-fiber ribbon to a single fiber cable. Alternatively, eight fibers can be replaced by eight multicore fibers, increasing cable bandwidth by a factor of eight. (See Fibercore Boasts Multicore Fiber Capabilities.)

  • SDN startup Viptela snuck out of stealth mode, touting a new architecture that the company claims can change the way enterprises deploy and manage their WANs. The company, which closed $33 million in funding from Sequoia Capital in December, has unveiled its Secure Extensible Network (SEN) software-based solution, which integrates routing, security and segmentation in a single solution that, according to Viptela, addresses the shift from client-and-server-based traffic to the new traffic patterns taking shape due to the use of cloud computing.

  • Optical equipment vendor Coriant has opened a North American facility, based in Coppell, Texas. The "state-of-the-art customer service, logistics and customer solutions engineering center" is just up the road from outposts of the Verizon Communications Inc. (NYSE: VZ), AT&T Inc. (NYSE: T), and XO Communications Inc. empires. That's handy! (See Coriant Launches Dynamic Optical Cloud.)

    — Carolyn Mathas, contributing editor, special to Light Reading

    (4)  | 
    Comment  | 
    Print  | 
  • Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
    Liz Greenberg
    50%
    50%
    Liz Greenberg,
    User Rank: Light Sabre
    5/14/2014 | 9:28:09 PM
    Re: Light at the end of the tunnel?
    The normal for transmission companies...or at least those that make the parts having to go with the normal we need more capacity or wait we have too much etc etc.  Rollercoasters have nothing on this segment of the industry.
    Ray@LR
    50%
    50%
    Ray@LR,
    User Rank: Blogger
    5/13/2014 | 1:53:32 PM
    Re: Light at the end of the tunnel?
    Swings and roundabouts -- I look forward to running the reports from other quarters this year whene they're all doing well and the stocks are going gangbusters.

    As the analysts say, it can be a bit 'lumpy'... ("Can I get some color on your lumpiness...")
    Liz Greenberg
    50%
    50%
    Liz Greenberg,
    User Rank: Light Sabre
    5/13/2014 | 1:13:55 PM
    Light at the end of the tunnel?
    It is always surprising when the optical companies earnings aren't so hot given where the demand should be.  Given all of the growth worldwide in 4G, LTE, 5G, etc.  optical transport is just going to have to keep growing, so it is probably the old timing issue...who is looking to buy what when, what orders have already been booked, etc.  I would think that overall the light should be laser sharp and multicolored at the end of this tunnel.
    DOShea
    50%
    50%
    DOShea,
    User Rank: Blogger
    5/13/2014 | 12:26:17 PM
    Finisar
    Interesting about Finisar--seemed like things had been going gangbusters for that company the last year or so, with 100G deployments and other activity surging.
    From The Founder
    Kicking off BCE 2017, Light Reading founder Steve Saunders lays blame for NFV's slow ramp-up and urges telecom to return to old-fashioned standards building and interoperability.
    Flash Poll
    Live Streaming Video
    Charting the CSP's Future
    Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
    LRTV Custom TV
    VeEX at ANGA COM

    6|27|17   |     |   (0) comments


    At ANGA COM 2017, Cyrille Morelle, president and CEO of VeEX, updates Alan Breznick with VeEX's new products and technology. This includes VeSion cloud-based platform for network monitoring, AT2500-3G advanced spectrum analyzer and MTTplus-900 WiFi Air Expert module. He also comments on DOCSIS 3.1 deployment and Remote PHY technology.
    LRTV Custom TV
    The Overall Objective Is to Win the Game

    6|26|17   |     |   (0) comments


    SCTE•ISBE's Chris Bastian discusses Energy 2020's success to date and the importance of a flexible approach that allows for changes in specific strategies in order to reach significant milestones.
    LRTV Interviews
    CenturyLink: Let's Get Past SD-WAN Hype

    6|23|17   |   04:02   |   (0) comments


    Technology becomes a "shiny object" unless it's properly focused on solving business needs for enterprise customers, says Bill Grubbs, network solutions architect for CenturyLink. He explains to Light Reading why SD-WAN deployments have to be tailored to specific needs – and more.
    Women in Comms Introduction Videos
    Infinera's Sales Director Paints Tech's Big Picture

    6|21|17   |   4:14   |   (1) comment


    Shannon Williams, Infinera's director of sales, shares how she achieves work's many balancing acts -- between her role and the broader company, today and tomorrow's tech and more.
    LRTV Custom TV
    SD-WAN Innovation & Trends

    6|20|17   |     |   (0) comments


    Versa CEO Kelly Ahuja discusses with Carol Wilson the current status and trends in the SD-WAN market, Versa's innovation around building a software platform with broad contextualization, and the advantages that startups can bring to the SD-WAN market.
    LRTV Interviews
    Ovum's Dario Talmesio on 5G in Europe

    6|20|17   |   02:16   |   (0) comments


    At 5G World 2017, Dario Talmesio, principal analyst and practice leader on Ovum's fixed and mobile telecoms European team, explains the emerging trends amongst European operators as they prepare for 5G.
    LRTV Custom TV
    Putting Power on a Pedestal

    6|19|17   |     |   (0) comments


    ARRIS's John Ulm says a major accomplishment of SCTE•ISBE's Energy 2020 program is increased focus on power cost and consumption, including inclusion of energy requirements in operators' RFPs and RFIs.
    LRTV Custom TV
    Gigabit Access: The Last-Mile Pipe for All Future Services

    6|19|17   |     |   (0) comments


    A Gigabit access platform being deployed today must be able to deliver all types of services to an increasing number of devices. A non-blocking architecture is necessary to support the ever-increasing growth in bandwidth demand. The Huawei Gigabit access solution is based on a distributed design that is fully scalable to deliver a unprecedented performance.
    LRTV Custom TV
    Key Factors to Successfully Deploy an SD-WAN Service

    6|19|17   |     |   (0) comments


    As service providers transition their SD-WAN solution from trials and limited deployments into production at large scale, there are important considerations to successfully operationalize these solutions and realize their full potential, without adding complexity, introducing uncertainty or disrupting current business operations. Sunil Khandekar, CEO and Founder ...
    LRTV Custom TV
    IoT Solutions: Rational Exuberance

    6|19|17   |     |   (0) comments


    IoT solutions are morphing from hype into viable business opportunities. Huawei has the platform and ecosystem support to help carriers successfully address new business opportunities in the IoT space.
    LRTV Custom TV
    Realizing ICN as a Network Slice for Mobile Data Distribution

    6|19|17   |     |   (1) comment


    Network slicing in 5G allows the potential introduction of new network architectures such as Information-centric Networks (ICN) as a slice, managed over a shared pool of compute, storage and bandwidth resource. Services over an ICN slice can benefit from many architectural features such as Name Based Networking, Security, Multicasting, Multi-homing, Mobility, ...
    LRTV Interviews
    Ovum's Mike Roberts on 5G Uptake

    6|19|17   |   04:08   |   (0) comments


    Mike Roberts, research director for Ovum's service provider markets group, explains why he has boosted his 5G subscriptions forecast.
    Upcoming Live Events
    October 18, 2017, Colorado Convention Center - Denver, CO
    November 1, 2017, The Montcalm Marble Arch
    November 1, 2017, The Montcalm Marble Arch
    November 2, 2017, 8 Northumberland Avenue, London, UK
    November 30, 2017, The Westin Times Square
    All Upcoming Live Events
    Infographics
    With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
    Hot Topics
    No Imagination: UK Chip Biz Goes Up for Sale
    Iain Morris, News Editor, 6/22/2017
    Does AT&T Deserve Time Warner?
    Mari Silbey, Senior Editor, Cable/Video, 6/23/2017
    Netflix's Lesson in Culture Expectation Settings
    Sarah Thomas, Director, Women in Comms, 6/21/2017
    Kalanick Steps Down as Uber CEO
    Sarah Thomas, Director, Women in Comms, 6/21/2017
    Like Us on Facebook
    Twitter Feed
    BETWEEN THE CEOs - Executive Interviews
    Following a recent board meeting, the New IP Agency (NIA) has a new strategy to help accelerate the adoption of NFV capabilities, explains the Agency's Founder and Secretary, Steve Saunders.
    One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
    Animals with Phones
    Live Digital Audio

    Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.