Finisar Q2 Results Miss Estimates, Provides Weak Q3 Outlook

(RTTNews) - Telecommunications equipment make Finisar Corp (FNSR) reported Thursday a net loss for the second quarter compared to last year, reflecting lower gross margins, higher operating expenses and a revenue decline.

Both adjusted earnings per share and quarterly revenues missed analysts' expectations. The company also provided earnings and revenue guidance for the third quarter, below Street view.

"The second quarter was challenging. During the quarter, we experienced decreased demand for telecom products compared to the prior fiscal quarter, due to sluggish carrier capital expenditures. In addition, sales of transceivers for wireless applications were soft as were sales to several datacom customers with lumpy order patterns," Chairman Jerry Rawls said in a statement.

The Sunnyvale, California-based fiber-optics company posted a net loss of $11.36 million or $0.11 per share for the second quarter, compared to net income of $29.97 million or $0.29 per share in the prior-year quarter.

Excluding items, adjusted earnings for the quarter were $0.23 per share, compared to last year's $0.43 per share. On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $0.25 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter increased to $296.98 million from $290.72 million in the same quarter last year, but missed fourteen Wall Street analysts' consensus estimate $315.25 million.

Gross margin for the quarter contracted 700 basis points to 28.6 percent from last year's 35.6 percent, reflecting higher operating expenses.

Total operating expenses for the quarter increased to $92.18 million from $73.26 million in the year-ago quarter.

Looking ahead to the third quarter, Finisar expects adjusted earnings in a range of $0.23 to $0.27 per share, on projected revenues between $297 million and $312 million. Street is currently looking for earnings of $0.28 per share on revenues of $323.85 million for the quarter.

"We remain confident in our industry leading market position and the long term growth potential for the industry. We expect revenue to grow sequentially in the third fiscal quarter, primarily driven by growth in the demand for 40 gigabit and 100 gigabit transceivers for datacom applications as well as transceivers for wireless applications," CEO Eitan Gertel stated.

FNSR closed Thursday's regular trading session at $17.00, down $0.31 or 1.79% on a volume of 1.97 million shares. The stock lost a further $0.39 or 2.29% in after-hours trading.