Companies plying their trade in the optical networking industry burst into life last week after Ciena Corporation (NASDAQ:CIEN) posted results that took everyone by surprise. Suppliers of optical networking components have trended higher since Ciena Corporation (NASDAQ:CIEN) released its results, and as such, I won’t be surprised if Finisar Corporation (NASDAQ:FNSR) steps on the gas next week (on June 19) when it releases its fourth-quarter results.
The stock is down around 10% this year, but considering the positive vibes in the industry and Finisar Corporation (NASDAQ:FNSR)’s own strength, I think it could provide a solid boost and momentum to its stock price. Let’s see what’s expected of Finisar and how its outlook shapes up.
On revenue
Analysts, according to Yahoo! Finance, expect revenue of $243 million in the quarter, which translates into a jump of just 1.3% from the year-ago period. However, Finisar Corporation (NASDAQ:FNSR) shouldn’t have much difficulty meeting this estimate as the company had itself guided for revenue between $235 million and $250 million when it released its third-quarter results.
The consensus estimate has been adjusted upward and is sitting in the middle of Finisar’s guidance. However, one can expect the company to deliver a beat on the top line even though Finisar Corporation (NASDAQ:FNSR) had said that a drop in the prices of telecom components would weigh on its telecom business. But then, the aggressive infrastructure upgrades by its customers and the fact that Finisar Corporation (NASDAQ:FNSR) says that it has been recording design wins should prove to be tailwinds.
In addition, Finisar’s datacom business has been performing well of late, and the presence of strong customers, such as Cisco Systems, Inc. (NASDAQ:CSCO), and the adoption of its new products should provide further thrust to the top line.
On earnings
Analysts expect Finisar Corporation (NASDAQ:FNSR) to earn $0.17 a share in the quarter, down from $0.21 in the year-ago period, but at the mid-point of its own guidance of $0.15-$0.19 a share. The company has a mixed history as far as bottom line performance is concerned with two decent beats in the last two quarters, a big miss in the one before those two and a break-even fourth quarter last year.
As it stands, Finisar should at least meet estimates this time, but if the effect of price reductions of telecom components weighs too heavily on the company, then we might not be able to see a beat. However, the fact that Finisar has been improving its capacity to meet strong demand indicates that the company is witnessing strong orders, and a higher capacity might lead to better margins and better earnings.
