Finisar Corporation (NASDAQ: FNSR) stock lost over 5.3% this morning post their lower than expected first quarter of 2018 performance. The group’s revenue fell 4.4% yoy to $341.8 million, against fourth quarter of fiscal 2017, hur by telecom revenues pressure coupled with weak performance in 10 gigabit and lower datacom transceivers.
Sales of datacom products fell 3.1% against last quarter due to falling sales of their 10 gig and lower transceivers, partially offset by increase of sales of 100 gig QSFP28 transceivers for datacom applications. Sales of telecom products lost 8.1% from fourth quarter. As a result, the group’s Non-GAAP income fell to $45.8 million or $0.40 per diluted share from $57.5 million or $0.50 per diluted share in the fourth quarter.
For our second fiscal quarter of 2018, the group expects a flat revenues for datacom products. But they expect their 100 gig QSFP28 transceivers coupled with initial sales of their high power of VCSEL arrays for 3D sensing to be ongoing. The group’s telecom revenues would continue to be under pressure hurt by falling demand from their Chinese OEM customers.
Non-GAAP gross margins is forecasted to in the range of 33% to 34% for the second quarter hurt by falling revenue levels, higher depreciation levels and the impact of the annual employee merit increases that took effect approximately on August 1.
However, Finisar Corporation is positive on their long-term growth as they expec an improving sales of a 100 gigabit QSFP28 transceivers for hyper scale data centers and high power VCSEL arrays for 3D sensing. The group’s production units for the second quarter would get affected from the change in their manufacturing process, but they expect to ship higher quantities in the fiscal third quarter. Moreover, by the end of the second quarter, they forecast their 100 gigabit, 200 gigabit coherent CFP2 ACO transceiver to be fully qualified by a major OEM customer that supplies into the Verizon Metro network. They forecast their ROADM line card to be qualified by the same customer during the third quarter.