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THE LIGHTWAVE BLOG

The Lightwave editorial staff uses The Lightwave Blog to share their thoughts on optical communications and whatever else might be the current topic of conversation from cubicle to cubicle. Feel free to add your own opinions. If you'd like to become a guest blogger, contact Editorial Director Stephen Hardy at stephenh@pennwell.com

Archive for 'November 2011'

    Oclaro expects Thai flood to affect two quarters

    November 15, 2011 7:06 AM by Stephen Hardy

    While other companies have offered predictions on the impact of the flooding in Thailand for the rest of this year, Oclaro (NASDAQ:OCLR) Chairman and CEO Alain Couder told financial analysts November 10 that he expects Oclaro to feel the flood’s effects for two quarters.

    Couder says he’s expecting the flood that has knocked out Fabrinet’s Chokchai facility and temporarily closed its Pinehurst campus to cost Oclaro $25 million to $30 million in lost revenue in the current quarter and another $10 million to $20 million in the company’s fiscal third quarter, which ends March 31, 2012.

    He is hopeful that things will return to normal in the company’s fiscal fourth quarter.

    Oclaro is fortunate in that it relies on Fabrinet for only 30% of its finished goods. The company produces 60% of its products in its facilities in Shenzhen (which will have been put up for sale as part of a cost-reduction plan; see "Oclaro looks to downsize") with the rest spread out at other facilities.

    However, 60% of its Fabrinet production took place at Chokchai. The company is currently moving as much of that as it can to Pinehurst, which has resumed limited operations this week. It also is attempting to fill in the gap at Shenzhen and elsewhere.

    The flood experience has not soured Oclaro’s relationship with Fabrinet, however. The two companies recently reached a new contract for manufacturing services.

    But Oclaro is about to introduce a second source for contract manufacturing services. It expects to sell the Shenzhen facility to a “major contract manufacturer” in the near future. Fabrinet and this new party will then compete for ongoing business, particularly new products.

    Other companies, such as NeoPhotonics and JDSU, have cited their expectations for the flood’s impact on their businesses during the current quarter (see "NeoPhotonics third quarter disappoints" and "JDSU forecasts down due to Thailand flooding"). Oclaro is the first company to extend its expectations into the coming year.

     

    NTT still unsure of 100G supplier for PC-1

    November 9, 2011 3:30 PM by Stephen Hardy

    Well, no wonder Infinera declined to comment on NTT's announcement that it would move forward with deployment of 100-Gbps technology on the PC-1 submarine cable network (see "NTT Com plans 100G for PC-1 transpacific submarine cable network"). It seems that the trial NTT conducted using Infinera's 100-Gbps systems was enough to convince NTT that 100G was ready for deployment, but not that Infinera was the right company for the job -- at least not yet.

    Responding today to a query I made on Monday, sources at NTT say the vendor decision is still up in the air. "We have done field trial with Infinera, but have not decided to adopt Infinera as a supplier for the deployment," reported NTT's Takeshi Kawasaki, who works in the media relatinons department. "We will decide future supplier comparing [Infinera] to equipments of other vendors."

    NTT and Infinera transmitted 100-Gbps traffic in both line-side and client-side formats across 9,500 km, Infinera announced last month (see "Infinera trials 100 Gbps undersea with Pacific Crossing"). NTT now says that it plans to deploy 100-Gbps technology on the undersea cable network by the middle of 2013.

    Kawasaki did not indicate when vendor selection would take place.


     

    JDSU's Waechter: Inventory no longer the problem

    November 2, 2011 1:54 PM by Stephen Hardy

    Talking to analysts November 1 after releasing his company's fiscal first quarter earnings (see "JDSU forecasts down due to Thailand flooding"), JDSU President and CEO Thomas Waechter said that the inventory issues in optical components he described during the previous quarter have largely eased. As illustrations, ROADM orders increased almost 25% sequentially and tunable XFP orders jumped 70% versus the prior quarter. (However, revenues in both areas declined, it was later revealed.) In fact, 7 out of 12 optical product lines saw an increase in orders over the prior three months.

    The issue now is longer capex approval processes at service providers, he lamented. This has led him to conclude that JDSU will not see a seasonal "budget flush" between now and end of the calendar year.

    Other highlights of the analyst call, with a hat tip to Seeking Alpha for the transcription:

    • JDSU has received indications that Fabrinet may have some capacity at its Pinehurst facility back online in the next week or two. The campus now has power, and water levels in the surrounding area have begun to recede.
    • The company expects to release a 40G coherent module in the second half of its fiscal 2012. Additional client-side 40G products also are on the way.
    • JDSU has 18 design wins for 40G and 100G technology, Waechter says, with an additional 39 "in process" with 20 customers.
    • According to CFO Dave Vellequette, the company had concluded that the September quarter would have represented the bottom of the revenue trough for the CCOP division prior to the flooding at Fabrinet. The company was expecting to guide for a revenue increase in the second quarter for this business before the monsoon hit Thailand.
    • On the Communications Test side, 100G also drove revenue increases, with a 41% jump year-on-year. The company shipped 26 units of 100G test equipment to 15 customers during the quarter.
    • During the Q&A portion of the proceedings, Waechter said he continues to have a healthy appetite for M&A and that he was seeing attractive opportunities in the test and measurement space.

    Ovum assesses Thai flood impact

    November 1, 2011 9:29 AM by Stephen Hardy

    As previously reported, optical equipment companies who have relied on Fabrinet to manufacture their products have a problem on their hands in the wake of the flooding in Thailand. Ovum's Daryl Inniss believes that second-sourcing options and other contingency plans will limit the damage to these companies' bottom lines.

    Inniss, in a brief posted on the Ovum website, lists Oclaro, Emcore, Infinera, Opnext, JDSU, and Finisar as among the companies using Fabrinet, all of which can expect to be affected to some degree. Finisar is perhaps in the best shape, since its use of Fabrinet's Chokchai and Pinehurst facilities is not as extensive as the other companies on Inniss's list.

    While the supply of optical communications components and subsystems will take a hit this quarter as a result of the floods, Inniss believes the impact will prove short-lived. He therefore doesn't believe the flooding offers competitors of the affected companies much of a chance to wrest away market share.

    "We expect the market to return to capacity by the end of 1Q12," he writes. "Component vendors will use internal manufacturing capacity where products and processes were developed before being outsourced and will use contract manufacturers where they have long-standing relationships and agreements. They can increase capacity by running multiple shifts, but they will be limited by the availability of test equipment."

    Inniss believes larger carriers and network equipment manufacturers to be less likely to feel the effects of a prolonged shortage because of their ability to use "parts in the pipeline" to meet their needs. Companies with smaller inventories may feel the pinch if shortages linger, however.

     

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Stephen Hardy

Stephen has covered fiber optics for more than a dozen years, and communications and technology for more than 25 years. He is responsible for establishing and executing Lightwave's editorial strategy across its digital magazine, website, newsletters, research and other information products. He has won multiple awards for his writing.

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