Finisar: Revenues down but turnaround imminent

Finisar Corp. (NASDAQ: FNSR) revealed that it too was no match for global macroeconomic weakness during its first fiscal quarter, which ended July 29, 2012. However, company management expects sales to bounce back immediately.

Finisar Corp. (NASDAQ: FNSR) revealed that it too was no match for global macroeconomic weakness during its first fiscal quarter, which ended July 29, 2012. However, company management expects sales to bounce back immediately.

The optical components and subsystems vendor reported yesterday that it saw fiscal 1Q13 revenues decline sequentially 8.1% ($19.4 million) to $220.5 million. Datacom product sales shrank by $6.6 million, while telecom-related product revenues declined by $12.8 million.

The downturn wasn’t a surprise, according to a statement Executive Chairman of the Board Jerry Rawls.

"As expected, our first quarter of fiscal year 2013 was challenging,” Rawls explained via press release. “This was primarily the result of sluggish macroeconomic conditions, especially in Europe, as well as the slowing of economic growth in China. Generally telecom spending throughout the world has been soft. In addition, we had two fewer shipping days in the first quarter than in the previous quarter."

The company’s gross margin was 26.2% on a GAAP basis and 30.3% on a non-GAAP basis, compared to 27.3% and 31.4%, respectively, in the preceding quarter.

But Rawls did have good news looking forward. "I am happy to report that we expect revenue growth to resume in the second quarter,” he said in the same statement. “In addition, we expect to hold operating expenses relatively flat, excluding the impact of a full quarter of the RED-C acquisition. Thus, we expect operating income will grow in the second quarter."

Rawls said he expects sales for the fiscal second quarter to climb to between $225 million to $240 million. GAAP operating margin will range between 0.0% and 1.5%, he added, while non-GAAP operating margin should be in the range of approximately 5.7% to 7.2%. This would put non-GAAP earnings per diluted share in the range of approximately $0.12 to $0.16.

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