March 3, 2006
On the eve of OFC/NFOEC, optical stocks are skyrocketing, fueled by a Finisar Corp. (Nasdaq: FNSR) earnings call raising that company's stock more than 40 percent.
Finisar stock was up $1.27 (43%) to $4.18 in midday trading. And other optical shares were climbing, too. Avanex Corp. (Nasdaq: AVNX) was up 39 cents (23%) to $2.08 -- and that's after the stock rose nearly 20 percent earlier this week. (See What the Heck's With Avanex?.)
Bookham Inc. (Nasdaq: BKHM; London: BHM) was up 96 cents (12.8%) to $8.45, while MRV Communications Inc. (Nasdaq: MRVC) climbed 34 cents (10.2%) to $3.66. Even giant JDSU (Nasdaq: JDSU; Toronto: JDU) got a boost, up 28 cents (8%) to $3.77 with more than 100 million shares traded, more than twice the usual amount.
The joy isn't necessarily spreading to the systems sector. Ciena Corp. (NYSE: CIEN) is fluttering above and below the break-even line; at this precise moment it's down 3 cents (0.65%) at $4.61, thanks to an analyst downgrade. (See Ciena Down on Downgrade.)
The optical lovefest stems from Finisar's earnings surprise. For its third quarter, ended Jan. 31, Finisar reported net income of $8.3 million, or 3 cents per share, on revenues of $93.5 million, compared with losses of $15.8 million, or 5 cents per share, on revenues of $86.6 million in the previous quarter. (See Finisar Reports Q3.)
For its third quarter a year ago, Finisar reported losses of $33 million, or 15 cents per share, on revenues of $73.1 million.
The profits of 3 cents per share eclipsed analysts' estimates of a break-even quarter, according to Reuters Research . And Finisar is forecasting another profit of about 3 cents per share for its first fiscal quarter, which ends in April.
Finisar thus met its goal, set last year, of profitability in the second half of its fiscal 2006. On a conference call yesterday, chairman and CEO Jerry Rawls told analysts the company has "emerged from the largest economic downturn in history," apparently forgetting about those pesky 1930s.
Now, it's important to remember that Finisar's strength is in enterprise optics, as opposed to the telecom optics that Avanex, Bookham, and JDSU play in. Still, for a sector that's been beleaguered for years, investors apparently are interpreting Finisar's news as a sign that the optical component business is finally coming back to normal.
Next week's OFC/NFOEC in Anaheim, Calif., could be the most upbeat one in years, analysts and vendors say. Dozens of companies have released product announcements in advance of the show -- just look here and scroll down to the "News Wire Feed" section.
— Craig Matsumoto, Senior Editor, Light Reading
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