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April 10, 2020
Test and measurement giant EXFO faced two types of viruses during its fiscal second quarter: COVID-19 shut down its Chinese factory and a computer virus disrupted its business enough to impact revenue. During its earnings call this week, EXFO said that both those problems are now behind it, although the full impact of COVID-19 is not yet known. The company said that its factory in Shenzhen, China, is fully operational now, and that its "information technology issue" has been resolved.
"A virus was detected and quickly contained at EXFO," CEO Philippe Morin said on his company's earnings call this week, according to a Seeking Alpha transcript of the event. "IT specialists were brought in to help to resolve the situation, and I can safely say this matter is behind us. We turned this incident into an opportunity to also firm up our IT security systems." When contacted by Light Reading, the company said it could not comment further on the topic "for security reasons."
EXFO's revenue for the quarter, ended February 29, was $55 million, in line with the projection EXFO made in late February, when it told investors the technology issue and the novel coronavirus were both impacting revenue. Previously, the company had projected revenue of at least $66 million for the quarter.
In what may be a sign of what's ahead as companies report earnings, EXFO told analysts that it cannot make any projections about future financial performance because "government-imposed lockdowns in many countries within the Americas, Europe and Asia have affected our visibility of future business."
"It will not be possible to offer revenue and earnings guidance for the foreseeable future," Morin said.
Morin did highlight two positive trends for EXFO that are related to the lockdowns. One is the need for more network bandwidth and the other is the need for EXFO's automated network monitoring solutions, since network operations centers are not fully staffed. He also described EXFO's Chinese factory as a competitive advantage, because China is currently not locked down the way many other countries are.
Morin fielded a question about his company's primary customers, the wireless carriers, by saying that investment now appears to be focused on making sure customer bandwidth needs are met.
"It is clear that there are needs now for bandwidth growth. So, they are looking at investment there," he said. "On the 5G side, I think that's still a bit too early to say if they're going to increase or delay."
Morin also told investors that EXFO is keeping a very close eye on expenses during this time, and has frozen all hiring.
— Martha DeGrasse, special to Light Reading. Follow her @mardegrasse
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