Last night after the close, fiber optic comms firm Finisar (FNSR 27.78, -7.12 -20.4%) reported a pretty rough quarter and gave equally cautious guidance for the coming period as restructuring charges, litigation settlements and resolutions of related costs continue to weigh on the company.
Since lows in the sub-$11 area back in the fall of 2015, shares of FNSR have made a nice recovery, carving out a nice range between $27-$36 thus far in 2017. The stock was modestly off YTD highs into the print last night, and gapped lower only to make fresh intraday lows as the session progressed.
Getting back to the results, however, the overbought share price (at least by RSI standards) was quickly corrected this morning after the company reported worse than expected Q3 earnings of $0.59 on equally worse than expected revenues which rose 23.1% compared to last year to $380.6 million.
By segment, sales of datacom products were up $7.3 million, or 2.8% sequentially. This increase was due primarily to growth in demand for 100G transceivers. Sales of 100G transceivers for datacom applications increased about 9% compared to the second quarter, and more than 110% compared to last year’s Q3.
Also, sales of telecom products grew about $3.5 million, or 3.2% sequentially. This increase was due mostly to higher sales of wavelength selective switch and ROADM line card products, primarily driven by FNSR’s Chinese OEM customers.
Looking ahead, FNSR sees worse than expected Q4 earnings of $0.50-0.56 per share on revenues which the company also sees coming in below market expectations in the range of $360-380 million on non-GAAP gross margins of about 36%. Further, the company sees telecom revenues declining about $15 million in Q4 based on three factors – annual telecom price reductions, seasonality associated with the Chinese New Year and lower revenues from the 100GB CFP transceivers in China. In Datacom, FNSR sees Q4 revenues growing about $5 million, mostly due to continued growth in 100GB QSFP28 transceivers.
In sum, the stock continues to break down today now near the $27.50 level, approaching support from mid-January near $27.22.