Finisar reports fourth consecutive quarter of revenue growth

Riding strong demand from the datacom sector, Finisar Corp. (NASDAQ: FNSR) said yesterday it set a revenue record in its fiscal 2014 first quarter, which ended July 28, 2013. The $266.1 million earned in the quarter was $22.7 million (9.3%) more than the $243.4 million of the previous quarter and a revenue record, the optical components and subsystems vendor said. And the current quarter should be even better.

The company had guided revenues to fall between $245 million to $260 million (see “Finisar 4Q13 a pleasant surprise”). The upbeat three months represented the fourth consecutive quarter of revenue growth. Datacom product sales of $184.4 million rose $20.5 million (12.5%) sequentially, led by sales of 10, 40, and 100 Gigabit Ethernet optical transceivers. Telecom products chipped in as well; revenues from this segment were $81.7 million, an increase of $2.2 million (2.7%) from the preceding quarter, thanks in large part to sales of tunable XFP modules.

The quarter saw GAAP gross margin of 34.3%, up nearly 7% from the fourth quarter of the previous fiscal year. The company saw GAAP net income of $26 million ($0.27 per basic share).

On a non-GAAP basis, gross margin was 35.1% and net income was $31.27 million ($0.33 per basic share).

"During the quarter, we continued to invest significantly in technology and product development,” said Eitan Gertel, Finisar's CEO, via a press release. “Our new products for 100-gigabit parallel and serial applications for either singlemode or multimode fiber applications continue to have strong customer demand. We also expect our new platform of high-density dual and single WSS [wavelength-selectable switches] will extend our leadership in the WSS market in both the component and ROADM line card form."

Gertel also reported during an analyst call that the company has begun to ramp production of its second-generation CFP 100GBase-LR4 module as well as CFP2 LR4 transceivers. The company expects to release CFP4 modules next year, he added.

Meanwhile, Gertel predicted that Finisar will begin sampling WSS modules based on liquid crystal on silicon (LCoS) for route-and-select colorless, directionless, and contentionless ROADMs by the fourth quarter of this calendar year. Production should begin in the first quarter of 2014, he concluded.

Looking forward, Finisar management expects demand for both datacom and telecom products to grow, with Gertel telling those on the call that he foresee “a slight improvement” in the telecom spending environment. The company has forecasted revenues for the current quarter to fall between of $277 million and $292 million. This will support a GAAP operating margin in the range of approximately 9.7% to 10.7%. On a non-GAAP basis, management expects operating margin to range between 13.7% and 14.7%, and non-GAAP earnings per diluted share to be in the range of approximately $0.37 to $0.41.

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