Oclaro concludes fiscal 2012, sees flat market in second half

Optical components and subsystems vendor Oclaro, Inc. (NASDAQ: OCLR) reported a sequential increase in revenues for the fourth quarter of 2012, but an overall year-on-year decline for fiscal 2012. Looking forward to the start of its upcoming fiscal year, marked by the recently completed merger with Opnext, Chairman and CEO Alain Couder told analysts who participated in a conference call July 31 that demand for the company’s products won’t be as robust in the second half of 2012 as he initially anticipated.

Optical components and subsystems vendor Oclaro, Inc. (NASDAQ: OCLR) reported a sequential increase in revenues for the fourth quarter of 2012, but an overall year-on-year decline for fiscal 2012. Looking forward to the start of its upcoming fiscal year, marked by the recently completed merger with Opnext, Chairman and CEO Alain Couder told analysts who participated in a conference call July 31 that demand for the company’s products won’t be as robust in the second half of 2012 as he initially anticipated.

Fourth quarter revenues came in at $104.4 million for the fourth quarter of fiscal 2012, an improvement over the $88.7 million the company saw in the third quarter. GAAP gross margin was 21% for the fourth quarter, versus 15% in the third quarter of fiscal 2012.

Oclaro came out of the quarter with a GAAP operating loss of $4.0 million. This figure included approximately $11.7 million of gain on the sale of assets previously held for sale and $3.4 million of net Thailand flood-related income from insurance advances, net of additional write-offs and expenses. The figure represented an improvement over the third quarter, which saw a GAAP operating loss of $15.9 million, which included $3.3 million of net flood-related income.

"Our results for the fiscal fourth quarter were in line with our previously announced guidance ranges," said Couder via a press release. "With the close of our merger with Opnext, we are well positioned as the #2 player in the optical components, modules and subsystems market. Customer feedback on the merger is very positive. Moving forward we are focused on accelerating the synergies of our combined business and capitalizing on the strengths of our customer relationships, comprehensive product portfolio and technologies, which we will discuss in detail during our quarterly conference call later today."

For fiscal 2012, revenues were $385.5 million, less than the $466.5 million earned in fiscal 2011. GAAP gross margin of 18% for fiscal 2012 also was off compared to the 27% of fiscal 2011. GAAP operating loss was $63.8 million for fiscal 2012, almost twice the GAAP operating loss of $33.6 million in fiscal 2011. The company cited the effects of the flooding at its contract manufacturer, Fabrinet, last fall as a major contributor to the down year.

Looking ahead to the first quarter of fiscal 2013, and the first quarter of the its efforts to integrate the Opnext assets, management forecasted revenues in the range of $154 million to $168 million, non-GAAP gross margin in the range of 17% to 21%, and adjusted EBITDA in the range of negative $17.0 million to negative $8.0 million.

“The market relative for the second half of 2012 is weaker than we announced in the merger in March,” Couder explained on the call. “And basically if you look at the market data, you could look at it as a flat market with the first half of 2012.” Couder said the company would step up its efforts to realize cost savings from the merger with Opnext to balance the market headwinds.

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