This column originally appeared on March 10 on Real Money, our premium site for active traders. Click here to get great columns like this.
For all the good news that optical component suppliers have seen over the last 12 months or so, it's been hard to forget the fact that many of the telcos that have historically accounted for a big portion of optical equipment spending aren't seeing much growth, and spending accordingly. Or that the industry in the past has been quite cyclical, with major growth spurts followed by sharp downturns.
Memories of such downturns were likely fresh on the minds of many optical investors on Friday, as Finisar (FNSR) fell 22.7% in response to weak results/guidance and took a slew of peers lower with it. But with some of Finisar's problems company-specific and multiple growth drivers still in place for component vendors, bargain-hunters able to stomach some near-term pain might want to give the group a look.
Finisar reported fiscal third quarter (January quarter) revenue of $380.6 million (up 23% annually) and adjusted EPS of $0.59, below consensus analyst estimates of $390 million and $0.62. The company also guided for April quarter revenue of $360 million to $380 million (up 16% annually at the midpoint) and EPS of $0.50 to $0.56, below a consensus of $393.4 million and $0.58.
Shares plunged to their lowest levels since September in response. Peers Oclaro (OCLR) , NeoPhotonics (NPTN) , Fabrinet (FN) , Acacia Communications (ACIA) and Advanced Optoelectronics (AAOI) respectively fell 7.4%, 6.8%, 6.2%, 3.9% and 3.3%. Acacia tumbled in response to soft guidance last month, and NeoPhotonics plunged in December due to a Q4 warning. Oclaro, Fabrinet and AAOI have delivered more encouraging numbers.