Finisar Leads the Charge of the Light Brigade

The optical networking market has been looking for direction the past couple of months. Late Wednesday, optical component maker Finisar (Nasdaq: FNSR  ) came through with a terrific second-quarter report, beating expectations and guiding even higher for the next quarter. In fact, Finisar's final sales of $241 million and $0.44 of earnings per share even beat the preliminary results Finisar reported three weeks ago.

The stock jumped sky-high on the news. The rest of the optical industry followed suit with strong gains for Oclaro (Nasdaq: OCLR  ) , Oplink Communications (Nasdaq: OPLK  ) , and JDS Uniphase (Nasdaq: JDSU  ) , because Finisar is a leader in its field and its business trends often act as a weather vane for the whole sector -- never mind the fact that some of these competitors and customers have troubles of their own; good news is good news.

Finisar's optimism for the next quarter is grounded in solid data, as the company receives orders faster than it can fill them. Data networks both large and small keep their orders flowing, while Finisar sees less growth in components for fiber-based cable TV equipment. The company has met and raised its long-term margin goals ahead of schedule. In short, the king of optical components is looking good from head to toe.

Copper-based networking still has a lot of life left in it, as evidenced by Extreme Networks (Nasdaq: EXTR  ) and the traditional data center products from Cisco Systems. Still, the long-term future of high-speed networking is optical -- and Finisar is perfectly positioned to profit from that trend.

Can you find a better networking play than Finisar these days? Then enlighten me in the comments below, because I can't.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. The Fool has written calls (bull call spread) on Cisco Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.


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