Finisar revenue grows in fiscal second quarter 2012

In a market niche looking for good news, Finisar Corp. (NASDAQ: FNSR) provided some when it reported yesterday that revenues for the second quarter of fiscal 2012 rose sequentially 5.8%.

In a market niche looking for good news, Finisar Corp. (NASDAQ: FNSR) provided some when it reported yesterday that revenues for the second quarter of fiscal 2012 rose sequentially 5.8%. However, Finisar management joined their compatriots at other optical component and subsystem companies by suggesting that macroeconomic conditions and the flooding in Thailand combine to create an uncertain environment going forward.

Finisar’s revenues for the quarter ended October 30, 2011 reached $241.5 million, up from the previous quarter’s $228.2 million as well as the year-ago quarter’s $240.9 million. Success in sales of wavelength-selective switches (WSSs), ROADM line cards, and tunable XFP transceivers led the way. This also was the first quarter in which revenue from the Ignis acquisition contributed for a full three months.

Telecom-related product revenues grew 13% sequentially, while datacom product revenues declined by less than 1%. The company recorded $128.5 million in revenue from these datacom products and $113 million from telecom products during the quarter.

Gross margins remained flat versus the previous quarter at 29.1%. This represented a decrease from 34.2% from the year-ago quarter. Executives pointed to the Ignis operations as one contributor to the gross margin results.

Looking forward, Executive Chairman of the Board Jerry Rawls told analysts on an earnings call yesterday that the company escaped significant direct impact from the flooding in Thailand. Unlike competitors such as EMCORE, Oclaro, and Opnext, the products Fabrinet manufactures for Finisar (PC boards) use the Pinehurst facility that didn’t flood. Rawls said that he doesn’t expect to see much of a direct drag on Finisar’s revenues in the upcoming quarters for this reason.

However, while he believes there is an opportunity to increase market share for some components at the expense of his less fortunate competitors, Rawls also echoed comments from NeoPhotonics that his customers’ inability to receive components from his competitors that work alongside Finisar products might still dampen sales in the short term. Coupled with the overall softness in the macroeconomic environment, this uncertainty led Rawls to forecast revenues for the upcoming quarter will fall within a range of $235 million to $250 million – the same guidance he gave for the just-completed quarter.

During the question and answer section of the call, CEO Eitan Gertel revealed that, despite the lack of applicable standards, Finisar development of a tunable SFP+ to compete with JDSU’s is well underway. He said he expects such a device to sample in the second half of next year.

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