NeoPhotonics Plans Restructuring, Incl. Job Cuts; Cuts Q3 Outlook

(RTTNews) - NeoPhotonics Corp. (NPTN), a manufacturer of optoelectronic solutions, on Thursday announced certain restructuring actions, including job cuts. The move is part of its continuing actions to improve profitability and cash flow. Citing the restructuring charges and weak demand in China, the company trimmed its forecast for third quarter.

In pre-market activity, NeoPhotonics shares were losing around 3 percent to $5.68.

The actions include a reduction in force, real estate consolidation, a write down of inventory for certain programs and assets and a write-down of idle assets.

The costs to implement these actions are expected to be approximately $4.8 million, with $4.2 million in asset-write off costs and $0.6 million in severance costs. The company expects to incur approximately $4.6 million of these costs in the third quarter with the remainder to be incurred in the fourth quarter.

For the third quarter, the company now expects loss per share of $0.50 to $0.40 and adjusted loss per share in the range of $0.35 to $0.27.

The company previously expected GAAP net loss per share of $0.21 to $0.11 and adjusted loss per share of $0.17 to $0.07.

Further, the company now expects GAAP gross margin of approximately 10% to 13% and non-GAAP gross margin of 14% to 17%. This is compared to previously expected GAAP gross margin of 23% to 26%, and non-GAAP gross margin of 24% to 27%.

Revenue for the quarter is now expected to be in the range of $69 to $71 million, down from previous forecast of $70 to $76 million.

On average, analysts polled by Thomson Reuters expect loss of $0.12 per share on revenues of $73.46 million for the quarter. Analysts' estimates typically exclude special items.

In addition to restructuring charges, margin and loss were negatively impacted by the company's decision to reduce production levels during the quarter resulting from a lack of visibility into future demand levels in China.

The Company anticipates these actions will help reduce inventory levels in the fourth quarter.

The actions being taken are expected to reduce quarterly operating expenses with immediate impact and achieve an approximately two million dollar reduction when fully realized in the first quarter of 2018. Tim Jenks, Chairman and CEO of NeoPhotonics, said, "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."