Optical networking companies have been struggling this summer. JDS Uniphase
But optical bellwether Finisar
Finisar is not the only networker to swim against the challenging currents, as industry giant Cisco Systems
For starters, these guys managed to keep pace with Street expectations. Finisar's adjusted earnings of $0.21 per share just snuck by the $0.20 analyst consensus, while 10% year-over-year sales growth led to perfectly acceptable revenue of $228 million.
But there are big differences, too. Cisco is a turnaround attempt in progress, heralded by public apologies from CEO John Chambers and deep cuts of every kind. It's a technology bundle in search of a market. By contrast, Finisar has worked itself out of the deep morass that trapped the company several years ago, and its terrific results come from crisp execution. Margins exceeded management's own expectations, driven by lower manufacturing costs.
All of that being said, networking is a cyclical industry, and we're certainly in a downward cycle right now. Finisar is used to annual revenue growth comfortably in the double digits and often as high as 50%, but the company issued a forecast that on the lower end is a drop in year-over-year sales in the coming quarter -- and Mr. Market is OK with that.
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