Oclaro 3Q11 results confirm preannouncement

As expected after it pre-announced bad news earlier this month (see “Oclaro: We’ll miss 3Q11 guidance”), Oclaro, Inc. (NASDAQ: OCLR) announced quarter-on-quarter declines in revenue and GAAP gross margin as well as an operating loss in the third quarter of its fiscal 2011. The quarter ended April 2, 2011.

The optical component and subsystems vendor reported revenues of $116.6 million for the quarter, a slide from the $120.3 million it earned in the second quarter of fiscal 2011. GAAP gross margin in the third quarter came in at 25%, versus 30% for the second quarter.

Overall, these numbers added up to a GAAP operating loss for the quarter of $6.2 million. Oclaro reported GAAP operating income of $1.6 million in its FY11 second quarter.

Cash, cash equivalents, and restricted cash came in at $75.7 million as of April 2, 2011 compared to $78.1 million the company had on hand January 2, 2011.

Oclaro cited inventory corrections as a principal reason for the poor performance in its preannouncement as well as in an interview with Lightwave (see “How long will the optical communications correction last?” as well as the video interview “Oclaro’s Couder offers 2011 guidance”). President and CEO Alain Couder repeated this theme in discussing the official quarterly results.

"Oclaro has continued to invest in its new product pipeline while certain telecom customers have experienced a short-term inventory correction," Couder said. "We expect the slowdown to continue through our upcoming fiscal fourth quarter. Our planned new products are expected to provide revenue growth and gross margin traction in the second half of the calendar year. We also remain confident in the second half because of the continued strong demand for broadband in the core optical market, and the increasing reliance on optical functionality throughout the network."

Consistent with this outlook, Oclaro says it expects fourth quarter FY 2011 revenues will fall within a range of $105 million to $115 million. Non-GAAP gross margin will likely fall within the range of 21% to 24%, while adjusted EBITDA for the fourth quarter will be in the range of negative $6.5 million to negative $1.5 million, the company predicted.

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