5 January 2012

Oclaro’s preliminary quarterly revenue of $86m beats $75-85m guidance

Optical component, module and subsystem maker Oclaro Inc of San Jose, CA, USA has provided further details about the progress of its recovery efforts from the flooding at the Chokchai and Pinehurst facilities of Thailand-based primary contract manufacturer Fabrinet Co Ltd (which manufactures 30% of Oclaro’s total finished goods).

“Our top priority has been to restart production in Thailand following the intensive floods, and minimize any impact to our customers,” says chairman & CEO Alain Couder. “As a result of the efforts of our teams in Thailand and around the world, we have made substantial progress in re-starting production for our affected product lines,” he adds. “These efforts have also contributed to our achieving preliminary revenues for the December quarter above the top end of our guidance range [about $86m, up on guidance (provided on 9 November) of $75-85m].”

Oclaro currently expects four of the five flood-affected product lines to have re-started commercial output at Fabrinet’s Pinehurst facility by the end of January:

• Commercial shipments of high-powered lasers resumed in November, and production capacity is currently at pre-flood levels.
• Commercial shipments of amplifiers resumed in the last week of December, and production capacity is expected to increase to pre-flood levels by the end of the March quarter.
• Commercial shipments of tunable dispersion compensators are expected to begin by the end of January, and production capacity is expected to increase to pre-flood levels by the end of the March quarter.
• Commercial shipments of lithium niobate external modulators are expected to begin by the end of January, and production capacity is expected to return to pre-flood levels early in the June quarter.
• Commercial shipments of WSS (wavelength-selectable switch) products are expected to begin at the end of the March quarter and production capacity is expected to return to pre-flood levels in the June quarter.

In the meantime, limited commercial output of lithium niobate external modulators and WSS products is being delivered from some of Oclaro’s existing Western sites.

Oclaro currently expects capital expenditure of about $6m in each of its second (December) and third (March) fiscal quarters. This includes the necessary capital currently expected to recover product lines lost during the flood. The firm believes that it has adequate property and business interruption insurance to cover its flood related losses. It also has certain insurance recovery rights under its supply agreement with Fabrinet. While the total amount of insurance claims, and related recoveries, if any, cannot be estimated at this time, Oclaro believes that an advance payment from its insurance carrier of more than $10m is likely to be received in the March quarter.

See related items:

Oclaro’s quarterly revenue flat due to Asian telecom slowdown

Oclaro’s ramp of higher-margin products delayed by optical telecom inventory correction

Oclaro hit by Chinese telecom inventory correction

Oclaro cuts quarterly revenue guidance by 8%

Oclaro’s profit dips during investment and ramp-up

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