3 March 2010


Finisar grows 32.4% year-on-year

For its fiscal third-quarter 2010 (to end-January), fiber-optic communications component and subsystem maker Finisar Corp of Sunnyvale, CA, USA has reported revenue from continuing operations of $166.9m (far exceeding December’s guidance of $148–158m). This is also up 32.4% on $126.1m a year ago and up 14.6% on Q2/2010’s $145.7m (following growth of 19.8% and 13.2% in Q1/2010 an Q4/2009, respectively).

“This marks our third consecutive quarter of growth in revenues at double digit rates,” says executive chairman of the board Jerry Rawls. “This is a result of a winning product portfolio and strong customer support as we worked to meet a surge in product demand.”

Of the $21.2m rise in revenue from last quarter, products for greater than 10Gbps grew $12.1m (23%), products less than 10Gbps grew $4.5m, and reconfigurable optical add-drop multiplexer (ROADM) products grew $3.7m.

On a non-GAAP basis, gross margin rose from 28.7% a year ago and 29.6% last quarter to 32.2%, reflecting the cost benefit of spreading fixed manufacturing costs over a larger number of units and a more favorable product mix.

“I am delighted with our progress in manufacturing operations and the improvements we were able to achieve in manufacturing yields,” says CEO Eitan Gertel.

However, non-GAAP operating expenses were $39.7m, up $5.5m on $34.2m last quarter and up $5.8m on $33.8m a year ago, due partly to the restoration of salary cuts taken during the previous year as well as variable compensation associated with the firm's improved performance. About $2m of the increase on last quarter was for items other than those related to compensation.

Non-GAAP operating income rose from $2.4m (1.9% of revenue) a year ago and $8.9m (6.1% operating margin) last quarter to $14.1m (8.5% margin). Net income was $11.5m, up on $7.5m last quarter and $1.6m a year ago.

“A robust order trend and healthy backlog have continued into our fourth fiscal quarter, which should enable us to make a strong finish to this fiscal year,” says Rawls.

For fiscal fourth-quarter 2010 (to end-April), Finisar expects revenue of $175–185m (up 5–11% on fiscal Q3). Gross margin should be level on fiscal Q3, and operating margin should be 8.5–10%).

“Our ongoing efforts to reduce product costs and transition production to our off-shore locations during the fourth fiscal quarter should position us well for realizing our previous target of 10% operating margin on a non-GAAP basis in the near future,” says Gertel.

*Steve Workman (chief financial officer since joining the firm in 1999 prior to its initial public offering) is to assume the role of senior VP of corporate development & investor relations, superseded by Kurt Adzema (VP of strategy & corporate development since joining in 2005), effective upon the filing of the firm’s Form 10-Q for fiscal Q3.

“During Steve’s tenure our optic revenues have grown more than 30x and he has successfully guided us through two financial crises,” says Rawls. “We felt that this redefinition of roles will help in managing the next phase of growth here at Finisar, and that now was an optimal time for this transition with the former-Optium business [acquired in August 2008] largely integrated with the rest of Finisar,” he adds. “Steve helped coordinate our corporate development efforts in the early days, including Infineon and Honeywell,” he continues.

“Since joining in 2005, Kurt has led our corporate development initiatives, including the merger with Optium and the divestiture of the Network Tools division,” Rawls says. “The experience he gained though his current role and his strong finance background will serve him well in his new role.”

See related items:

Finisar’s capacity constraints suppress profit margin despite upturn

Finisar’s revenue grows 20%, driven by 10-40Gb/s applications

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