Optical equipment maker NeoPhotonics (NPTN) is down 14% after the company lowered third quarter guidance and announced restructuring this morning.
The company announced layoffs, real estate consolidation, a write down of inventory for certain programs and assets and a write-down of idle assets. The company aims to accelerate the goal of a return to profitability by lowering the Company's breakeven revenue levels for profitability and free cash flow, while maintaining the Company's focus on its core capabilities, including its industry leading coherent components and solutions for datacenter interconnect and telecommunications systems. The actions being taken are expected to reduce quarterly operating expenses with immediate impact and achieve an ~$2-million-dollar reduction when fully realized in the first quarter of 2018.
NeoPhotinics also lowered third quarter revenue to $69-71 million from $70-76 mln and non-GAAP EPS to ($0.35-0.27) from ($0.07)-0.17. The midpoint of sales guidance would represent a 32% decline year-over-year.
"Lacking a clear indication of increased demand in China in the third quarter, we initiated several operational changes with the goal of expediting our return to profitability, including implementing certain restructuring initiatives designed to align our business with the current demand environment and lowering manufacturing output to manage inventory levels," said Tim Jenks, Chairman and CEO of NeoPhotonics. "In taking these actions, we have maintained our research and development focus on products for next generation coherent systems, operating at 400 Gigabits/sec to beyond 1 Terabit/sec, wherein our advanced hybrid photonic integration provides the highest value."
NPTN is trading at a two and a half year low. Raymond James subsequently downgrade the stock this morning.
Investors in optical stocks are waiting for demand to pick up out of China, but that may not have materialized just yet. This news is weighing on optical peers this session:
- AAOI -3.56% IIVI -2.95% IPHI -2.76% ACIA -2.30% FN -2.18% OCLR -1.95% LITE -1.61% VIAV -1.46% FNSR -0.99%