Updated with added information about Oplink's results.
The San Jose, Calif.-based Oclaro is a smaller player but the depth of its miss in its fiscal first-quarter ended Sept. 30 as well as its below-consensus outlook for the December period still took a heavy toll on the group.
In addition to Oclaro's plus-37% drop, JDS Uniphase (JDSU), which was downgraded by RBC Capital, fell 11.4% to close at $10.24; Finisar (FNSR) lost 6.5% to $16.86; Ciena (CIEN) fell 3.1% to $13.32; and Oplink Communications (OPLK), which was downgraded along with Oclaro by BWS Financial, tumbled 15.2% to $15.25."Overall demand drivers remain, yet we believe the overall trend of book-to-bill in this [optical component] segment may be decreasing from a month-to-month point of view," said RBC Capital in its note detailing the downgrade of JDS Uniphase to market perform from sector perform. "Oclaro's revenue miss may accentuate this point." The firm also cut its 12-month price target on JDS Uniphase's stock to $13 from $16 and trimmed earnings expectations for other companies in the group. BWS Financial lowered its rating on Oclaro to sell following the company's poor outlook and set a 12-month target price of $6.50 on the stock, implying further downside of more than 25%. "Demand trends have changed significantly as telecom customers are delaying some capital expenditure programs, which is leading to communications equipment manufacturers' reliance on finished inventory," said the firm said in its note, adding later: "We would expect the group to see further selling pressure as peers release earnings reports showing increased inventory levels and pushed out customer purchasing trends."
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