Optical components

Finisar Sees Hope, Again

Economic recovery could still be a ways off, but Finisar Corp. (Nasdaq: FNSR) officials are still saying their company may be close to seeing revenues increase.

They're also quick to say that any number of economic twists or catastrophes could derail that prediction completely. (Gee, thanks.) But at a time when most companies aren't making any long-term predictions, Finisar is saying it might deliver good news by the end of the year.

"We think the upcoming quarter ended April 30 probably marks the low point of this correction," chairman Jerry Rawls said on Thursday's earnings call.

That's solely for Finisar, mind you. The company isn't predicting that all of telecom (or datacom) is poised for recovery.

Finisar shares were up a penny (3.9%) to 27 cents in after-hours trading.

It's worth noting that Finsar said something similar three months ago. In reporting second-quarter earnings, the company said its fourth quarter, in April -- what's now the "low point" -- could see revenues tick upward due to recent qualifications on a variety of products. (See Finisar Sees Hope.)

One difference this time is that Finisar claims it's got ordering data to back up its optimism.

"We have seen in recent weeks an increase in our order rate, and actually a pretty impressive increase in our order rate. All of that indicates to us that maybe this thing is bottoming out," said Rawls. "It's too early to call this the end, but we have a number of optimistic signals in our business."

Other signals include qualifications of products -- including line- and client-side 40-Gbit/s transponders -- into new customers, an event that normally translates to revenues in one quarter, CEO Eitan Gertel said.

Even so, Finisar is lowering its near-term forecasts just like everyone else. (See Components Companies Face a Chilly Winter.)

The company says fourth-quarter revenues will be between $115 million and $128 million, missing the analyst consensus compiled by Reuters Research of $135 million.

For its third quarter, which ended Feb. 1, Finisar reported revenues of $136 million, pretty much matching the company's warning of a month ago. (See Finisar Reports Q3 and Finisar Preps Layoffs.)

The question did come up: Why is Finisar predicting a down quarter if orders are doing so well? Rawls replied that the company has to be conservative with its predictions, given the unpredictable economy. "What we've got to have is 13 weeks" of good orders to make a quarter, he said.

Separately, Rawls listed some products Finisar will be showing at OFC/NFOEC late this month:
  • 120-Gbit/s parallel optics product, which should be sampling at about the same time.
  • 100-Gbit/s Ethernet optical link.
  • 16-Gbit/s Fibre Channel link.
  • 43-Gbit/s dual quadrature phase-shift keying (DQPSK) transponder for telecom.

For its third quarter, Finisar reported net losses of $47.4 million, or 10 cents per share. Non-GAAP net income was $2.3 million, rounding to zero cents per share. Analysts were expecting a small loss that would also have rounded to zero cents per share.

— Craig Matsumoto, West Coast Editor, Light Reading

DarkWriting 12/5/2012 | 4:10:03 PM
re: Finisar Sees Hope, Again You have to understand that the players in this business, particularly fiber optic transceiver manufacturers and Silicon Valley entrepreneurs/VCs, are known to be eternal optimists and that you must take this stuff with a grain of salt. We will see if they are right. Can't hurt to think positively just don't put money on their stock until the numbers are there.

HomerJ 12/5/2012 | 4:10:03 PM
re: Finisar Sees Hope, Again no way this is the bottom. you will see finisar revenue easily below $100M/Q this yr
Pete Baldwin 12/5/2012 | 4:10:02 PM
re: Finisar Sees Hope, Again Good point, DarkWriting.

I tend to be more pessimistic myself (in part because of the tech industry's history of overoptimism). I'm willing to believe Finisar's revenues might grow in July or even April. But it'll be flat or back down afterwards, I'd think.
Mark Sebastyn 12/5/2012 | 4:10:01 PM
re: Finisar Sees Hope, Again The trend that has been established in this whole sector will require a steady stream of positive news before things reverse. The reality of today is no one really gives a sh*t about these companies as investments anymore.
johnsylv 12/5/2012 | 4:09:48 PM
re: Finisar Sees Hope, Again That's an understatement. I'd say this industry needs a biblical torrent of good news for several quarters before anyone notices it.
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