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3 August 2007


Opnext’s sales for 10-40Gbps products rise 88% year-on-year

For its fiscal first quarter (to end June), optical module and component maker Opnext Inc of Eatontown, NJ, USA has reported its four consecutive quarters of sales growth and profitability. Revenue of $67.8m is up 3.7% on $65.4m last quarter and 67.8% on $40.4m a year ago.

This growth was mainly a result of sales of products for transmission rates of 10Gbps and above rising to $55.8m, up 4.7% sequentially due to strong demand for 40Gbps and 10Gbps datacom products, and up 88.4% year-on-year due to continuing strong demand for 300-pin tunable, X2, XENPAK, XFP and 40Gbps products.

Sales of products for date rates of less than 10Gbps were $7.3m, while industrial and commercial product sales were $4.7m. Sales to Cisco and Alcatel-Lucent were 35.0% and 23.0% of total sales, respectively.

Gross margin has grown from 32.8% a year ago and 34.9% last quarter to 36.0%, mainly due to 10Gbps and above product sales, cost reductions, and the reduction in stock-based compensation expense compared with last quarter, which collectively more than offset price declines.

Net income was $6.7m, an improvement on the net loss of $3.5m a year ago and net income of $1.5m last quarter.

“We are encouraged by the overall acceleration of broadband applications globally and the demand it is creating for high-speed optical networks, which has translated into solid demand from our core customer base,” says president and CEO Harry Bosco.

During the quarter, Opnext completed the expansion of its 40Gbps manufacturing capacity to meet growing demand. “We also expanded our 10GbE [10 Gigabit Ethernet] product family to include LX4, LRM and ER X2 modules as well as SR and LRM SFP+ products,” says Bosco. “Our 10Gbps telecommunication product line has been expanded to include 80km XFP modules and tunable duo-binary transponders for long haul transmission,” he adds. “During the second half of this fiscal year, we expect to further expand our SFP+ and 40Gbps product offerings.”

For its fiscal second quarter (to end September), Opnext expects revenue of $72-75m (up 6.2-10.6% quarter-to-quarter and 30.2-35.6% year-on- year, consistent with the firm’s aim to grow at least as fast as the market). “Longer term, we continue to expect our gross margin to approach 40% and our operating margin to approach 15%, both excluding the impact of stock-based compensation expense,” concludes Bosco.

See related items:

Opnext closes $254m IPO

Opnext boosts red lasers output power for display and medical applications