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23 May 2008

 

Opnext revenues rebound from December-quarter dip

For its fiscal fourth-quarter 2008 (to end-March), optical module and component maker Opnext Inc of Eatontown, NJ, USA has reported revenue of $72.7m, up 9.5% on last quarter’s $66.4m (when vendor quality and production delays limited shipment of 40Gb/s products ) and up 11.2% on $65.4m a year ago. The rise is due mainly to increased sales of 40Gb/s, X2, 300-pin tunable, and SFP and XFP data products, but was partially offset by lower demand for 300-pin fixed-wavelength modules.

Sales of 10Gb/s and above products grew 11.3% to $60.1m, while sales of less than 10Gb/s products grew 9.3% to $8.2m, and sales of industrial and commercial products fell 10.2% to $4.4m.

Sales to Cisco rose to 45.7% of total sales (from 37.7% last quarter), while sales to Alcatel-Lucent fell from 19.9% to 14.3%.

Gross margin has fallen slightly from 33.9% a year ago to 32.9%, due mainly to increased sales of lower-margin SFP and 10Gb/s multi-mode fiber data products and the negative effect of foreign currency exchange fluctuations.

Operating loss (including $1m of stock-based compensation expense) was $0.8m, compared to operating income of $1.8m last quarter, due mainly to higher R&D and marketing communication expenses, costs incurred to amend previously filed financial statements, non-cash charges related to the disposal of certain obsolete fixed assets and the negative effects of foreign currency exchange fluctuations. Consequently, net income has fallen from $4.3m to $0.9m.

“Following the bumps in the road encountered in the December quarter [for which revenue was down 13.3% on the September quarter’s $76.6m], we're particularly glad to be back on our growth plan,” says president and CEO Harry Bosco. This capped a strong fiscal 2008, as revenue rose 27% from fiscal 2007’s $222.9m to $283.5m and net income grew from $0.7m to $17m.

“Deployment of broadband applications continues to drive demand for our products,” says Bosco. In particular, sales of 40G products rebounded, and demand continues to build across Opnext’s customer base (leading to the firm recently committing to expand manufacturing capacity).

While sales to main customer Cisco remained strong and well balanced across product lines, Opnext continues to increase its design wins with customers such as Huawei, Ericsson, and Nortel. Also, a pick-up in spending by certain Japanese customers suggests that telecom builds are progressing.

“We are encouraged by the market opportunities that we have before us as we broaden our product lines to address new markets in the highest-growth market segments,” says Bosco. “We believe the 10G and above market segment should continue to grow faster than the overall market,” he adds. “However, there continues to be limited visibility in short-term customer demand, lumpiness in customer spending patterns, and uncertainty related to the broader economic downturn. For these reasons we believe it is prudent to remain cautiously optimistic for the upcoming June quarter, just as we were entering the March quarter.”

For fiscal first-quarter 2009 (to end-June), Opnext expects a slight rise in revenue to $74-77m. “For fiscal year 2009, we are well-positioned to continue our growth in the 10G and 40G markets, while expanding our 40G portfolio to address broader network applications,” concludes Bosco.

See related item:

Opnext’s profits fall due to parts supply problems

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