Finisar's New Numbers

4:50 PM -- I was relieved last quarter to hear somebody else say Finisar Corp. (Nasdaq: FNSR) had confusing earnings. It's not just me, then.

Finisar just has a lot going on, financially. There was a debt buyback in August, for instance.

The real kicker was the sale of the Network Tools business -- test gear for Fibre Channel devices -- to JDSU (Nasdaq: JDSU; Toronto: JDU). (See JDSU Deal Addresses Finisar's Debt.) Network Tools now gets pushed into the "discontinued operations" category, meaning it's not part of Finisar's reported revenues. Which means there's a bit of backing-out to do if you want to create comparisons to past quarters.

Finisar's first-quarter earnings, reported yesterday, managed to put things rather clearly, I thought. If I'm reading the charts right, here's how the breakdown went, for the optics portion only:

Table 1: Finisar: Optics Alone
1Q09 1Q10 Change (%)
Revenues ($M) 115.8 128.7 +11%
Net Income ($M) 2.9 -11.1 -483%
EPS ($, GAAP) 0.01 -0.02 -300%
Share Price ($) 1.18 1.02 -14%
Source: Finisar, Yahoo Finance. Figures exclude the Network Tools business sold to JDSU.

But the $115.8 million doesn't include Optium, which hadn't been fully assimilated as of August 2008. Optium reported $47.2 million for the quarter ended Aug. 2, 2008, which means the combined Finisar/Optium had $158 million revenues in the year-ago quarter. If I'm doing all the math right.

Just to keep things interesting, Finisar also announced a 1-for-8 reverse stock split to come on Sept. 25. It's not a surprise; companies need to keep a stock price above $1 to keep the trading exchange happy and to attract institutional investors.

Finisar didn't mention that on the earnings call. Its stated reason for the reverse split is another common one, though: to make earnings-per-share growth more obvious by lowering the number of shares, CEO Jerry Rawls said.

He might have a point. At the current number of shares outstanding, Finisar's earnings-per-shares is as flat as Kansas.

Table 2: Finisar's EPS Crawl
3Q09 4Q09 1Q10 2Q10 3Q10
Per Share (�)
0 0 0 1* 1*
* Projected. All figures non-GAAP.
Source: Finisar; Reuters Research

— Craig Matsumoto, West Coast Editor, Light Reading

Pete Baldwin 12/5/2012 | 3:56:42 PM
re: Finisar's New Numbers

Hi Nelson -- Correct, the $128M  includes Optium.  It's last year's $115M that doesn't, if I'm reading the Sep.'08 press release correctly.  Right?

(I'm willing to admit I may have messed up.  There are a lot of numbers to pick from, all with very similar names attached.  It's quite a tangle, which was the real point of this post.)

nelson3748 12/5/2012 | 3:56:42 PM
re: Finisar's New Numbers Craig, the 128.7M number does include optium; it was the "continuing ops" number that did not include optium (that is the way i read it)
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