Finisar Q3 Profit Plunges, But Adj Profit Tops View

(RTTNews) - Telecommunications equipment make Finisar Corp (FNSR) reported Thursday a profit for the third quarter that plunged from last year, despite revenue growth, reflecting significantly lower operating margins.

Adjusted earnings per share matched analysts' expectations, while quarterly revenues topped their estimates. The company also provided earnings and revenue guidance for the fourth quarter.

The Sunnyvale, California-based fiber-optics company posted net earnings of $1.68 million or $0.02 per share for the third quarter, sharply lower than $27.06 million or $0.26 per share in the prior-year quarter.

Excluding items, adjusted earnings for the quarter were $0.25 per share, compared to last year's $0.44 per share. On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $0.25 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter increased to $306.28 million from $294.02 million in the same quarter last year, and topped thirteen Wall Street analysts' consensus estimate $305.79 million by a whisker.

The company noted that revenue growth was driven by the demand for 40 gigabit and 100 gigabit transceivers for datacom applications, as well as transceivers for wireless applications.

Operating margin for the quarter contracted 1020 basis points to 1.1 percent from last year's 11.3 percent as gross margin plunged 1040 basis points, hurt by the annual telecom price reductions and low yields on a new optical engine product.

Looking ahead to the fourth quarter, Finisar expects adjusted earnings in a range of $0.22 to $0.28 per share, on projected revenues between $310 million and $330 million. Street is currently looking for earnings of $0.23 per share on revenues of $307.92 million for the quarter.

Te company noted that the fourth quarter fiscal 2015 will have 14 weeks compared to 13 weeks in the preceding quarter. However, the positive benefit to revenue of the extra week will be partially offset by the impact of Chinese New Year which occurred in February. In addition, operating expenses are expected to increase primarily due to the extra week.

FNSR closed Thursday's regular trading session at $20.33, up $0.05 or 0.25% on a volume of 2.64 million shares. The stock surged a further $1.18 or 5.80% in after-hours trading.