Finisar Revenues Dip
The company reported its revenues for the second quarter of fiscal year 2002 were 21 percent lower than the same period last year -- a drop from $44.5 million to $35.1 million. Compared to its first quarter earnings, however, the company reported a three percent rise in revenues. The results were in line with analyst expectations.
In trading at noon today, Finisar shares declined $2.08 (16.34 percent) to $10.65.
The fall in stock prices comes as no surprise to Robertson Stephens analyst Igor Illic. “For the last couple of weeks, Finisar was trading at a level that wasn’t justified,” he says. “People’s expectations for growth weren’t merited.”
This, Illic insisted, has nothing to do with Finisar, but with the economy in general. “Finisar is still a very good company,” he says. “It’s still a leader.”
During the quarter, which ended October 31, 2001, the maker of optical subsystems, test equipment, and storage networking gear suffered a net loss of $55.4 million, or 31 cents per share, down from a net loss of $22.5 million, or 15 cents per share in the second quarter of fiscal 2001.
After a series of non-cash and cash charges, Finisar reported a pro forma net loss of $9.1 million, or 5 cents per diluted share, for the quarter, compared to a pro forma net income of $7.5 million, or 4 cents per diluted share, for the same period a year earlier.
Despite the losses, Jerry Rawls, President and CEO of Finisar, was cautiously optimistic. “We continue to believe that this industry has enormous growth potential,” he said on a conference call yesterday. “In terms of our activity with customers, it’s at fever-pitch. There is a very high level of activity going on.”
The optimism doesn't translate into a better forecast for the company’s third quarter, however. Rawls said last night that Finisar's growth will be flat or even negative during this period. “I am frankly trying to be conservative,” he admitted, saying that the company’s outlook was based on the forecasts of its customers. “That’s why I say flat to down a little bit. We’re pretty optimistic, but we hesitate to be euphoric, or to beat the drum or the table too loudly.”
Robertson's Illic agrees with Finisar's cautious stance: “Things are basically stabilizing. They have reached a level where they will probably stay for some time.”
In terms of specific segments of its business, Finisar says sales of its optical components and subsystems dropped by 32 percent compared to the second quarter of 2001, while sales of network test and monitoring systems were up 37 percent in the quarter compared to the same period last year and 12 percent compared to the previous quarter.
The company was hit with a lot of merger-related costs, including $31.4 million in amortization of acquired intangible assets, $2.5 million in amortization of deferred compensation, and $6.8 million in amortization of acquired developed technology. These costs primarily reflected a series of acquisitions -- of Demeter Technologies, Medusa Technologies, Sensors Unlimited Inc., Shomiti Systems Inc., and Transwave Fiber, all of which occurred between Finisar's second fiscal quarter of 2001 (which ended October 31, 2000) and the first fiscal quarter of 2002 (which ended July 31, 2001).
— Eugénie Larson, special to Light Reading