Ticonderoga on IT Hardware & Networking - Derivative Thoughts on Finisar's (FNSR) Weak 4QFY11 Print
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Up: 10 | Down: 12 | New: 9
Rating Summary:
6 Buy, 15 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 10 | Down: 12 | New: 9
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Ticonderoga on IT Hardware & Networking - Derivative Thoughts on Finisar's Weak 4QFY11 Print
Ticonderoga analyst said, "After Ciena's Challenges, Finisar Highlights Further Optical Weakness. Last night, optical component supplier Finisar (Nasdaq: FNSR)(not rated) provided another disappointing outlook that follows the challenges discussed by Ciena (Nasdaq: CIEN)(NR) last week. The optical industry weakness in 1Q11 appears to be extending into 2Q11, highlighting the potential for disappointing trends in the telecom and networking markets in the coming quarters."
"A Big Miss from Finisar. Last night, Finisar reported 4QFY11 sales of $236.9 million (down 10% Q/Q) that missed the Street's estimate of $242.8 million, while also offering up a disappointing 1QFY12 outlook, with revenue expected to be in the range of $215 million to $230 million compared to the Street estimate of $251.8 million. We believe that Finisar's optical revenue trends and commentary represent a piece of the networking puzzle that should not be ignored and could foreshadow more challenges ahead for the group."
"Optical Weakness to Weigh on Networking and Supply Chain Stocks. In our networking universe, Juniper Networks (Nasdaq: JNPR)(Neutral) has the highest exposure to the carrier market at 67% of 1Q11 sales and the stock's valuation remains healthy, while by Cisco Systems (Nasdaq: CSCO)(Buy) generates approximately 35% of sales from service providers and contributed 16% of FY10 sales for Finisar. Also, Cogo (Nasdaq: COGO)(Neutral) could be susceptible to the slowdown at China-based telecom equipment vendors (22% of 1Q11 sales were from telecom) as highlighted by Finisar last night. Finally, Plexus (Nasdaq: PLXS)(Neutral) generated 47% of March quarter sales from communications equipment and highlighted more volatile customer forecasts last week, while Corning (NYSE: GLW)(Sell) generated 25% of 1Q11 sales from the telecom market that includes optical."
Ticonderoga analyst said, "After Ciena's Challenges, Finisar Highlights Further Optical Weakness. Last night, optical component supplier Finisar (Nasdaq: FNSR)(not rated) provided another disappointing outlook that follows the challenges discussed by Ciena (Nasdaq: CIEN)(NR) last week. The optical industry weakness in 1Q11 appears to be extending into 2Q11, highlighting the potential for disappointing trends in the telecom and networking markets in the coming quarters."
"A Big Miss from Finisar. Last night, Finisar reported 4QFY11 sales of $236.9 million (down 10% Q/Q) that missed the Street's estimate of $242.8 million, while also offering up a disappointing 1QFY12 outlook, with revenue expected to be in the range of $215 million to $230 million compared to the Street estimate of $251.8 million. We believe that Finisar's optical revenue trends and commentary represent a piece of the networking puzzle that should not be ignored and could foreshadow more challenges ahead for the group."
"Optical Weakness to Weigh on Networking and Supply Chain Stocks. In our networking universe, Juniper Networks (Nasdaq: JNPR)(Neutral) has the highest exposure to the carrier market at 67% of 1Q11 sales and the stock's valuation remains healthy, while by Cisco Systems (Nasdaq: CSCO)(Buy) generates approximately 35% of sales from service providers and contributed 16% of FY10 sales for Finisar. Also, Cogo (Nasdaq: COGO)(Neutral) could be susceptible to the slowdown at China-based telecom equipment vendors (22% of 1Q11 sales were from telecom) as highlighted by Finisar last night. Finally, Plexus (Nasdaq: PLXS)(Neutral) generated 47% of March quarter sales from communications equipment and highlighted more volatile customer forecasts last week, while Corning (NYSE: GLW)(Sell) generated 25% of 1Q11 sales from the telecom market that includes optical."
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