Every major optics company has now forecast March-quarter revenues lower than Wall Street had predicted -- and some, like Avanex Corp. (Nasdaq: AVNX) and Opnext Inc. (Nasdaq: OPXT), disappointed with December-quarter numbers as well.
Of course, tech companies across the board are facing a tough stretch. This week, Cisco Systems Inc. (Nasdaq: CSCO) lowered its sales forecast down to the level of two years ago. (See Cisco's Still Sinking.)
But the optical components sector didn't enjoy Cisco-like growth during the last two years. Adding to the drama was the fact that so many of these companies announced earnings during the last couple of days (see table below).
Table 1: Downhill Slope
Wall Street Expectations
|Source: Company reports, Thomson Financial
* Includes StrataLight, acquired in January
Note that we're skipping Finisar Corp. (Nasdaq: FNSR), which hasn't reported earnings yet. But the company did catch the Disappointment Train, saying third-quarter revenues would be $137 million, rather than the $146 million Wall Street was expecting. (See Finisar Preps Layoffs.)
Here are some highlights from yesterday's earnings calls.
The company is cutting 2,000 jobs and some other fixed costs as it sells its Shenzhen, China, manufacturing facility to Sanmina-SCI. (See JDSU Selling Shenzhen Facility.) Another 200 jobs are likely to go, separately, meaning JDSU (Nasdaq: JDSU; Toronto: JDU) is trimming about one third of its 6,645 employees.
JDSU has already said it's planning to cut several manufacturing sites.
"More than 20 percent of presently occupied real estate will be vacated," new CEO Thomas Waechter said on yesterday's earnings call.
The Shenzhen deal, expected to close within a month, would lower JDSU's breakeven point to revenues of around $290 million.
JDSU stock was down 23 cents (5.6%) at $3.88 in midday trading.
StrataLight came up light for Opnext, with revenues of $24 million in the company's third quarter, which ended Dec. 31. That's down from $33 million in the previous quarter.
But StrataLight might be the growth engine for Opnext during the next year or even two. Opnext says revenues for its fourth quarter will be $80 million to $90 million. Assuming StrataLight revenues stay flat, that means sales from the original Opnext are declining quite a bit -- because Opnext by itself managed to amass $80 million in sales back in September.
Opnext wowed investors in the wrong direction with its earnings, reporting losses of 10 cents per share when analysts were expecting a profit of 1 cent.
Opnext shares were down 14 cents (6.2%) at $2.11 midday.
Like JDSU, Avanex is cutting staff. The company has 486 employees -- down about 29 from a quarter ago -- and is laying off another 5 percent of its staff this quarter, CEO Giovanni Barbarossa said on yesterday's earnings call.
Avanex's cash and short-term investments fell to $37.3 million, from $49.7 million in the previous quarter. In a research note this morning, analyst Paul Bonenfant of Morgan Keegan & Company Inc. called the drop "precipitous" and noted that it's one incentive for Avanex to be merging with Bookham Inc. (Nasdaq: BKHM; London: BHM). (See Bookham, Avanex Tie the Knot and Bookham, Avanex Defend Their Deal.)
Avanex's non-GAAP losses of 40 cents per share missed Wall Street's 30 cents estimate by plenty. The stock was trading down 4 percent at $1.70 midday today.
— Craig Matsumoto, West Coast Editor, Light Reading