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We caution you not to rely on these statements without also considering the risks and uncertainties associated with these statements and our businesses that are addressed in our filings with the US Securities and Exchange Commission that are available on the SEC's website, located at www.sec.gov, including the sections entitled Risk Factors in our annual report on Form 10-K and our quarterly reports on Form 10-Q. We assume no obligation to update any forward-looking statements to conform such statements to actual results or to changes in our expectations, except as required by applicable law or regulation.With us today from EMCORE are Dr. Hong Hou, President and Chief Executive Officer and Mark Weinswig, Chief Financial Officer. Mark will review the financial results and Hong will discuss business highlights before we open the call up to questions. I'll now turn the call over to Mark. Mark Weinswig Thank you Vic and good afternoon everyone. Today, I am going to focus my discussion on our third fiscal quarter operating results and our balance sheet. Consolidated revenue for our third fiscal quarter totaled $41.1 million, which is an increase of $3.3 million or 9% over the previous quarter. The increase was primarily due to higher Fiber Optics revenue, offset by reduction in our Solar business. Our Q3 revenue guidance was $38 million to $41 million. On a segment basis, our Photovoltaic business accounted for $15.3 million or 37% of the company's total revenue. This represents a $0.6 million or 4% decrease from the prior quarter. As we've said previously, while we believe in the long-term growth prospects of this business, our revenues in any given quarter may be a bit lumpy. The Fiber Optics segment accounted for $25.8 million or 63% of the company's total revenue. This represents an increase of roughly $3.9 million or 18% from the prior quarter, with the increase primarily from our recovery efforts after the flood in Thailand.
In the third quarter, we recognized $1.8 million of revenues related to the divested enterprise product lines versus $4 million in the prior quarter. Hong will discuss the prospects of the Fiber Optics business later on the call.Consolidated gross margin was 10.7%, a 3.5 percentage point decrease from the prior quarter, primarily attributable to deterioration in our solar segment margins and the shift towards Fiber Optics which typically have lower margins. On a segment basis Photovoltaic gross margin decreased 8 percentage points to 13% as we were unfavorably impacted by higher losses in our terrestrial solar business, various losses from power outage at our Albuquerque location and lower yields. We believe that this segment can reach gross margin targets of 30%. Fiber Optics gross margin was 9.3% flat with the prior quarter primarily from higher margins from increasing revenues offset by higher excess and obsolete charges, losses on purchase commitments and yield variances associated with our manufacturing ramp up. The gross margin for our Fiber Optics segment would have been over 15% in the quarter if we exclude these items and our consolidated gross margins would have also been close to 15%. We expect our gross margins in the Fiber Optic segment to improve in future quarters as our revenues continue to increase. After we complete the rebuild of the manufacturing lines damaged by the flood, we will lay out the operating targets for the fiber segment. Total operating expenses for R&D and SG&A were $13.8 million excluding the flood related charges; gain on sale of assets, legal settlements and impairment charges. During the third quarter we recorded a gain on the sale of the enterprise product line of $2.8 million. We have differed $4.9 million of the gain on sale until the indemnification obligation and adjustment contingencies are cleared. Read the rest of this transcript for free on seekingalpha.com