For fiscal second-quarter 2013 (ended 28 October 2012), fiber-optic communications component and subsystem maker Finisar Corp, of Sunnyvale, Ca, USA, a global technology leader for subsystems and components for fiber-optic communications, has reported revenue of $232m, up $11.5m (5.2%) on the prior quarter's $220.5m.
Fiscal Q2/2012 Q3/2012 Q4/2012 Q1/2013 Q2/2013 Revenue $241.5m $243m $239.9m $220.5m $232m
Compared to last quarter, sales of products for datacom applications grew by $0.4m (0.3%), while sales of products for telecom applications grew by $11.1m (13.7%). "Our growth in revenues came primarily from sales of tunable XFP transceivers and wavelength-selective switches, including ROADM line-cards," commented executive chairman Jerry Rawls. On a non-GAAP basis, gross margin increased to 30.5%, slightly up from 30.3% last quarter, primarily as the result of higher revenue levels.
"Operating income increased at a faster rate than revenues [up by $3.8m to $15.8m (operating margin of 6.8% of revenue), compared to $12m (5.4% of revenue) last quarter] because we were able to keep operating expenses relatively flat," notes Rawls. "This was achieved in spite of the impact of a full quarter of operating expenses from operation of our RED-C subsidiary, which we acquired during the first quarter." EBITDA rose by $3.9m, from $24.9m (11.3% of revenue) last quarter to $28.7m (12.4% of revenue).
During the quarter, cash and cash equivalents rose from $220.5m to $262.4m. At the end of the quarter, Finisar had about $40m in principal amount of convertible notes outstanding with a conversion price of $10.675 per share.
"We continued to invest significantly in technology and product development and made substantial progress on a number of new products including tunable SFP+ transceivers, 100G coherent transponders, and next-generation 100G client CFP and CFP2 transponders," noted CEO Eitan Gertel.
"For our telecom business, we continued the expansion of our Flexgrid WSS [wavelength-selectable switch] product portfolio, and our 10G, 40G, and 100G transceivers and transponders," he added. "On the line side, we have begun shipping samples of our 100Gb/s coherent line-side transponders. Customer feedback has been very positive, and we believe this market represents a significant growth opportunity for our company," said Gertel.
"In the wireless segment, Finisar continues to win new tenders for our 6 Gigabit SFP CPRI products for LTE base-station deployment. The ramp of next-generation higher-data-rate LTE is driving the need for 10 Gigabit SFP+ modules, which will allow Finisar to capitalize on our vertical integration to offer superior value for our customers," he continued.
"For our tunable XFP transceiver business, we continue to grow our market share and expand our production capacity. As we are continuing to add new customers and new variations of the tunable XFP product, we expect the growth trends for this product line to continue.
"In datacom, we are continuing to invest in a variety of form factors for high data rates, for short- and long-reach transceiver applications," Gertel added.
"In the 40G space, the demand for our QSFP SR4 and LR4 product is strong, and we are investing to rapidly expand our capacity. Our proprietary optical engine product has been a great success for us, and we recently were awarded a large core routing opportunity.
"We expect these new products to drive our future revenue growth and market share expansion in calendar 2013 and beyond," concludes Gertel.
Despite the world's economic outlook remaining uncertain, for fiscal Q3/2013 Finisar expects revenue of $230-245m and non-GAAP operating margin of 6.5-8.0%. "Non-GAAP gross margins are expected to continue to improve to approximately 30.7%, and reflect the impact of one month of the annual telecom price reductions that typically take place on 1 January," says Rawls. "Our fiscal fourth quarter will be the first quarter to experience three months of impact from the annual telecom price reductions."
