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Optical/IP

ONI Beats Estimates, Boosts Guidance

ONI Systems Inc. (Nasdaq: ONIS) handily beat analysts’ estimates today as it reported net revenues of $30.2 million for its fourth fiscal quarter 2000, an 84 percent increase over its third quarter results. The firm hasn’t yet broken even, as shown by its reported pro forma net loss of $11 million or (0.09) per share.

ONI bested Wall Street's expectation of a loss of 11 cents per share, and its revenues were well above the Street's expectation of $20.3 million.

More interesting, though, CEO Hugh Martin had some strongly worded predictions about the metro optical market, which ONI addresses with DWDM (dense wavelength-division multiplexing) products. Martin said the metro optical market will not be hurt by the carrier spending crunch that’s pummeled the larger equipment companies: “There may be some slowing for the long-haul market, but we only see accelerating deployments for metro applications,” Martin said during the conference call.

ONI added three new customers in the quarter for a total of 16. Martin reiterated that ONI should have between 24 and 26 customers by the end of the year.

Martin backed up his enthusiasm by boosting ONI’s guidance for the coming quarter and the end of the year. Last quarter ONI said it would hit between $180 million and $190 million in revenues for 2001. Today it raised those expectations to the $210 million to $220 million range. ONI also raised its expectation for revenues for its first fiscal quarter of 2001 to the $35 million to $40 million range.

ONI Systems, SEC filings During the Q&A session, Martin took care to thump his big competitors, Nortel Networks Corp. (NYSE/Toronto: NT) and Cisco Systems Inc. (Nasdaq: CSCO). Regarding Nortel, Martin said that success in the long-haul space doesn’t guarantee success in the metro market. "It may even be a hindrance,” he said Martin said Cisco's ONS 15454 business is “flattening” and that there’s a business shift from multiservice aggregation platforms to dynamic optical products. He also noted that ONI is favored by the “ever-shortening link” between enterprise networks and metropolitan networks.

Martin said he was watching what Cisco will do when it enters the market with the product line it obtained in the acquistion of Qeyton (see Cisco To Buy Qeyton For $800 Million), but he didn’t see any startup as an immediate threat.

ONI’s stock dropped 1.88 (3.5%) to 50.75 in regular trading Thursday. The stock had climbed back up to 51.99 on the Island ECN just after the earnings results were issued by the company.

-- Phil Harvey, senior editor, Light Reading http://www.lightreading.com
iprsvp 12/4/2012 | 8:55:37 PM
re: ONI Beats Estimates, Boosts Guidance Can some one explain me what's good about
ONI online. Was there any article on lightreading
about ONI(technical). How do they differ from NT/CIEN.
echo 12/4/2012 | 8:55:31 PM
re: ONI Beats Estimates, Boosts Guidance Why ONIS down today?
hippo 12/4/2012 | 8:55:30 PM
re: ONI Beats Estimates, Boosts Guidance I think investors need to start realizing there are different companies in the world, and focus on the fundamentals each of them. Then study the companies case by case.

Now, some companies beat the estimate, but because of one stupid news about a tanking company's accounting practice (LU), the whole sector, AND the whole market is down... This is ridiculous.

It never stops amazing me that investors would find every single possible reasons, and excuses to buy/sell. What has this market turned into?

Scott Raynovich 12/4/2012 | 8:55:28 PM
re: ONI Beats Estimates, Boosts Guidance probably the valuation.
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