Will Finisar Corporation (FNSR) Join in the Optical-Networking Renaissance?

Finisar Corporation (NASDAQ:FNSR)On Wednesday, Finisar Corporation (NASDAQ:FNSR) will release its latest quarterly results. With the stock having traded down sharply from its highs in early 2011, investors are hoping that the company can finally pull off a long-awaited turnaround and send shares higher.

Finisar and many of its rivals have faced the difficulty of weak demand for its optical-networking products. But a few signs point to a reversal of that trend, potentially pointing the way to better times for the company. Let’s take an early look at what’s been happening with Finisar Corporation (NASDAQ:FNSR) over the past quarter and what we’re likely to see in its report.

Stats on Finisar

Analyst EPS Estimate $0.17
Change From Year-Ago EPS (19%)
Revenue Estimate $242.95 million
Change From Year-Ago Revenue 1.3%
Earnings Beats in Past 4 Quarters 2

Source: Yahoo! Finance.

Can Finisar keep its earnings up?
Analysts haven’t budged in their views on Finisar Corporation (NASDAQ:FNSR)’s earnings over the past few months, making no changes to their consensus figures for the April quarter. But they’ve reined in their fiscal 2014 estimates by $0.02 per share, and the stock has responded negatively, falling about 3% since mid-March.

Finisar has been under pressure for some time, with factors including slowing growth in China and the ongoing slump in Europe hurting its prospects. Finisar relies on orders from telecom companies and data-network operators, so when business conditions in those industries are poor, the pessimism tends to flow through to Finisar’s results as well.

But recent good news from Ciena Corporation (NASDAQ:CIEN) has Finisar investors looking for better times ahead. Earlier this month, Ciena’s stock jumped 17% after the company reported a 6% increase in sales, pointing to a revival in spending on network infrastructure. Comments from Ciena Corporation (NASDAQ:CIEN) CEO Gary Smith suggest strength not just for his own company but also for the industry as a whole, and that sent both Finisar Corporation (NASDAQ:FNSR) and larger rival JDS Uniphase Corp (NASDAQ:JDSU) higher on the news. JDS Uniphase issued a fairly weak earnings and outlook early last month, needing to temper expectations for a revival in its own sales during the current quarter. As a result, Ciena Corporation (NASDAQ:CIEN)’s news came as a pleasant surprise for the industry, and with Finisar counting Ciena as a customer, Ciena’s success reflects directly on Finisar Corporation (NASDAQ:FNSR).

Finisar Corporation (NASDAQ:FNSR) can point to several catalysts that could boost its prospects. For instance, Cisco , which is also a Finisar customer, has had to respond to challenges from rivals to its networking dominance, and Cisco has also tried to branch out into broader areas of the big data trend. Greater investment from Cisco and its peers could lead to more orders from them for Finisar products, given Finisar’s emphasis on makers of storage systems, networking, and telecommunications equipment.

In Finisar’s quarterly report, watch for commentary about what recent good news from industry peers like Ciena Corporation (NASDAQ:CIEN) means for the company going forward. If times are indeed getting better, Finisar Corporation (NASDAQ:FNSR) needs to capitalize rather than letting its competitors grab all the glory.

The article Will Finisar Join in the Optical-Networking Renaissance? originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Cisco Systems (NASDAQ:CSCO).

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