Canaccord Genuity Morning Coffee on Finisar (FNSR): Blame China
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Price: $23.77 --0%
Rating Summary:
6 Buy, 15 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 4 | Down: 8 | New: 1
Rating Summary:
6 Buy, 15 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 4 | Down: 8 | New: 1
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Canaccord Genuity Morning Coffee on Finisar (Nasdaq: FNSR): Blame China.
Canaccord analyst says, "Shares of Finisar took a beating as the fibre-optic company tripled its Q3 earnings but provided Q4 guidance that was well below analyst expectations due to slowing demand in China. The company reported Q3 earnings of $0.47 per share on revenue of $263 millions, in line with Wall Street’s forecast of $0.47 on $258 million; however, the big disappointment for investors was Q4 guidance of $0.31-0.35 on $235-250 million versus the consensus of $0.48 on $269 million. Executive Chairman Jerry Rawls said he doesn’t expect the decrease in Chinese demand to be a long term issue, but that it is a reality that the company must face in the coming quarter. Rawls stated that underlying demand for bandwidth and the company’s position as the industry leader remains strong and will manifest in the coming quarters. The weak forecast sent a shockwave through the fibre-optic sector, driving down shares of JDS Uniphase (Nasdaq: JDSU), Ciena (Nasdaq: CIEN), Infinera (Nasdaq: INFN) and Oclaro (Nasdaq: OCLR). Credit Suisse points out that Finisar’s comments are consistent with the capital expenditure trend at Chinese telecom companies. Capex at the three major Chinese telecom companies has declined into FY10 and the trend is expected to continue over the next three years, with estimated decreases of 8.6% in FY11 and 12.6% in FY12. The weak guidance moved Credit Suisse to drop their earnings estimates for both CY11 and CY12; however, the brokerage remains bullish on the stock, as they believe the weakness will be temporary and does not contradict their cyclical view that bandwidth constraints are driving carrier investments in systems that deliver greater bandwidth and more flexible networks that Finisar’s products enable."
Canaccord analyst says, "Shares of Finisar took a beating as the fibre-optic company tripled its Q3 earnings but provided Q4 guidance that was well below analyst expectations due to slowing demand in China. The company reported Q3 earnings of $0.47 per share on revenue of $263 millions, in line with Wall Street’s forecast of $0.47 on $258 million; however, the big disappointment for investors was Q4 guidance of $0.31-0.35 on $235-250 million versus the consensus of $0.48 on $269 million. Executive Chairman Jerry Rawls said he doesn’t expect the decrease in Chinese demand to be a long term issue, but that it is a reality that the company must face in the coming quarter. Rawls stated that underlying demand for bandwidth and the company’s position as the industry leader remains strong and will manifest in the coming quarters. The weak forecast sent a shockwave through the fibre-optic sector, driving down shares of JDS Uniphase (Nasdaq: JDSU), Ciena (Nasdaq: CIEN), Infinera (Nasdaq: INFN) and Oclaro (Nasdaq: OCLR). Credit Suisse points out that Finisar’s comments are consistent with the capital expenditure trend at Chinese telecom companies. Capex at the three major Chinese telecom companies has declined into FY10 and the trend is expected to continue over the next three years, with estimated decreases of 8.6% in FY11 and 12.6% in FY12. The weak guidance moved Credit Suisse to drop their earnings estimates for both CY11 and CY12; however, the brokerage remains bullish on the stock, as they believe the weakness will be temporary and does not contradict their cyclical view that bandwidth constraints are driving carrier investments in systems that deliver greater bandwidth and more flexible networks that Finisar’s products enable."
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