In addition, non-GAAP financial measures will be discussed today. Please visit the Investor Relations section of the NeoPhotonics Web site for a copy of the company’s press release, which contains an explanation of these non-GAAP financial measures as well as a reconciliation to the comparable GAAP measures.Before I turn the call over to Tim, I’d like to mention that NeoPhotonics will present at the dbAccess 2012 Technology Conference in Las Vegas on September 11 and Think Equity’s 9th Annual Growth Conference in New York on September 12. Now, I will turn the call over to Tim Jenks. Tim… Tim Jenks Thank you for joining us today. I will provide a financial update and discuss progress in our overall business. I will comment on our expansions with products for Coherent and other high speed networks, on our view about the industry and its direction as a whole, and on our developments in the Russian market with the Russian Corporation of Nanotechnologies. In the second quarter, we delivered record revenue of $63.0 million, significantly above our projected range of $55-$61 million provided in our first quarter 2012 conference call. Further, our diluted loss per share from continuing operations was $0.13, a significant improvement from a loss of $0.47 in the prior quarter. Our non-GAAP gross margin expanded to 26.5%, which was well above our projection and an increase from 23.9% in the prior quarter. We believe we are on a sustainable path of growth and accelerating our path to profitability. We experienced increased demand across key parts of our business, notably for high speed products used in Coherent networks as well as in Agility products and in our Access business. These are important points as NeoPhotonics has made a sustained investment in Coherent capabilities. We now have several products being sold in volume in this growth market and we view the change to Coherent as a sea change in network architecture, much like the change to 10 gigabit per second dense wave-division multiplexing networks, or DWDM, more than a decade ago. This year we are seeing some fruits of our labor.
We have seen some slowing in the China domestic market, more generally last year, and the first half of this year. However, the Access market in this region continued to show strength.We have noted various reports about carrier capex being moderated somewhat, as well as our having macro-economic concerns, notably in Europe. Nonetheless our business has continued on track. We recognize that carriers are choosing carefully where to invest their capex and the areas of our steady focus – 40G and 100G Coherent and fiber-to-the-home Access – are some of their chosen investment areas. Our positive results were slightly offset by modest demand in the Other Telecom group of products, notably for 10G and below applications. I should point out, however, that this group of products grew absolutely during the quarter. Broadly speaking, we believe this is consistent with the rest of the market and is the impact of capex changes and carrier choices, which impact the 10G and below market segment. In fact, through the first half of the year we have seen diminished strength of 10G and other legacy applications as well, though the overall impact on NeoPhotonics has been more modest than for other companies who have larger exposure as a percent of their revenue to 10G. As is typically the case for our business, our second quarter was strong, and this year it was notably strong in 40G and 100G Coherent network applications. Our customers were responding to rapidly growing demand for their Coherent systems, which include products such as Coherent Receivers, Coherent Mixers and Narrow Line Width Tunable Lasers. In addition, our high speed Client side applications include transceivers at speeds at 10G, 40G and 100G, and in various form factors including CFP, XFP and SFP+. We expect that these products will be significant contributors to NeoPhotonics results in the quarters ahead. Read the rest of this transcript for free on seekingalpha.com