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21 August 2009


Opnext halves underlying losses as demand stabilizes

For its fiscal first-quarter 2010 (to end-June 2009), optical module and component maker Opnext Inc of Fremont, CA, USA has reported revenue of $85.3m, up 2% on $83.6m last quarter and just 1.3% on $84.2m a year ago (despite the inclusion of $32.3m from the former StrataLight Communications Inc of Los Gatos, CA, USA, acquired on 9 January).

“Our sequential increase in revenue for the June quarter and indications from our customers suggest that demand has stabilized,” says president & CEO Gilles Bouchard. Revenue from sales to Ciena Corp, Cisco Systems Inc and Nokia Siemens Networks (NSN) represented 57.6% of sales (similar to last quarter’s 58.7%, as increased sales to Ciena and Cisco were partially offset by decreased sales to NSN).

In particular, sales of 10Gb/s and below products rose in all major product categories (except 300-pin fixed-wavelength modules), by 16.5% from $41.2m last quarter to $48m. Sales of 40Gb/s products fell by 11.8%, from $39.7m to $35m (with a drop for subsystems partially offset by growth for modules). Sales of industrial and commercial products fell by 14.8%, from $2.7m to $2.3m.

“We experienced a rebound in our 10G sales in both datacom and telecom applications,” says Bouchard. “As expected, 40G sales returned to more normalized levels following the spike in demand in the March quarter.”

Excluding non-cash charges and costs from the StrataLight acquisition as well as stock-based compensation expense, non-GAAP gross margin has risen from 13.5% last quarter to 23.2%. This is attributed to lower material and outsourcing costs, lower manufacturing spending, and favorable product mix more than offsetting the effect of lower average selling prices.

Compared with non-GAAP net income of $3.9m a year ago, non-GAAP net loss has been halved from $18.5m a year ago to $9.2m, due mainly to the improvement in gross margin and lower operating expenses (after a $2.8m benefit from cost-reductions).

During the quarter, cash and cash equivalents fell by about $3.6m to $165.3m, as $1.7m of capital expenditures and $2.8m of capital lease payments exceeded $0.9m of cash from operations.

“I am encouraged by our solid operational achievements in the June quarter. The fixed-cost actions taken and the variable-cost initiatives we have underway contributed to positive cash flow from operations,” says Bouchard. “We remain committed to preserving cash while investing in key 10G, 40G and 100G technologies, which we believe will position us well as demand returns and the market emerges from this current downturn,” he adds.

“For the remainder of the year, sales of our 40G subsystems products will vary depending on the timing of carrier deployments,” Bouchard continues. “While we expect modest growth in our 10G and 40G module business, visibility remains limited and we, therefore, remain cautious.” Hence for fiscal second-quarter 2010 (to end-September 2009) Opnext expects revenue to remain stable at $80-90m.

See related item:

Opnext’s 40Gb/s spike compensates for 10Gb/s inventory burn-off

Opnext’s revenues fall 12% from last quarter

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