Paul Silverstein - Cowen and Company - Analyst
Let's move beyond China. You've noted that your view of Verizon was that it would be a second-half event, and here we are speaking in June, the second-half is not far off. In curtain form, it's not just Verizon who certainly gets the most attention in terms of coming 100 gig metro build-outs, but there's AT&T and there's quite a number of others. Can you share some incremental insight of what you expect for the second half of this year outside of China and into 2017? What would be the key drivers there? I assume it's going to be principally 100 gig Metro along with DCI before we start talking about specific products?
Greg Dougherty - Oclaro, Inc. - CEO
I think the DCI and Metro will be huge growth opportunities for us as we go out the end of this year and into next year. And as I mentioned, what's nice is that the majority of that is the 200 and 250 gigabits, not just 100 gigabits, which the higher the speed, the more it plays into our sweet spot. So the more differentiated we are as it moves up in speed and that's in Metro. That's in the long-haul, and that's inside the data center, which would be the second driver for us.
So the client-side optics, the QSFP28 market, has been stronger than we anticipated. We are actually -- probably my fault we didn't put enough capacity in fast enough, and so we are scrambling now to catch up. We are finding great opportunities for both the 10 kilometer distance called LR4, and then also the 2 kilometer distance, which is the CWDM. So we feel we are well positioned there. All coming back to the fact that we make our own laser chips and the fact that not many companies actually can make chips that work at 100 gigabit applications.
PRHL has had soem massive news flow and investors are just starting to catch on. This company has already shown that it can move moving up almost 100% before pulling back. PRHL could be huge
Remember that Bookham was a UK company that was merged into Oclaro.
Oclaro has both R&D and a fab in the UK so a 10% devaluation in the UK Pound versus the US dollar will decrease costs 10%.
This cost decrease goes directly to the bottom line as profit.
Well, I'm into OCLR and NPTN. They're both at high PE (those that have E), so I expect risk, and they're certainly popular for trading programs; I try to tag along and trade the more apparently wild swings. I'm currently behind in NPTN but hoping the earnings and next forecast will bring it back to my price. The optical business sounds like it should do what we're hoping.
One thing is happening. Look how many articles and cramer yelling buy buy buy. Looks to me the players are wanting to move money out and trying to manipulate the price yet again. Buyout would give a nice pop but that has always been the hope for longs. I doubt if oclaro can run the distance on its own for years to come with the too many players in this sector undercutting each other day in day out.
Yes, abandoned by buyers. Back during the previous upcycles... in 2006 and 2011, these boards were buzzing with excitement from new investors about how these stocks will benefit with skyrocketing bandwidth demand. The hype was thru the roof.
This 100G cycle, which is just getting started for metro and DCI networks, will produce more demand and spending on optics than that in the past, but look at these boards ...just the same few long time posters that have been around here for a decade at least. And undoubtedly, those who came in too late
or stayed in too long, got wiped out.
So, there is certainly a lack of interest from the retail investors, and very little attention is given in the mainstream financial blogs, either. It just looks like these plays have been abandoned at this point.
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So maddening. Today yet another money losing Unicorn tech company is going public - Twilio - at a valuation and stock price 3X OCLR. I realize OCLR is not a powerhouse but they are a leader in their industry and seem to be doing a good job lately, are profitable and giving good forward guidance. Yet massive money losers like TSLA, TWTR, etc. still trade at insane valuations.
Five Years From Now, You'll Probably Wish You'd Grabbed This Opportunity: As we've just explained, Oclaro is a great buy now THE STREET
Cloud services and internet-related companies such as Alibaba, Alphabet (Google), Amazon, Apple, Baidu, Facebook, Microsoft, Twitter, and Yahoo spent 54% more on property, plant, and equipment in the first quarter of 2016 than they did in the year-ago quarter, reports LightCounting in its new "Quarterly Market Update Report." Optical technology, particularly 100-Gbps ports, benefited significantly from this largesse.
The market research firm says the companies listed above, along with the rest of the 16 web companies the firm also tracks, spent a total of $14.5 billion on infrastructure during the quarter. Apple, Facebook, and Tencent more than doubled their outlays year-on-year. Microsoft spent a record $2.3 billion. Amazon, eBay, LinkedIn, and Microsoft all increased spending by double digits, LightCounting says.
LightCounting previously had reported record sales of 100G DWDM optics during the quarter (see "Telecom 100-Gbps optical component sales strong to start in 2016: LightCounting"). Among the webscale companies, sales of 10-km 100GBASE-LR4 ports led the way, followed by sales of 100-m, 0.5-km, and 2-km 100 Gigabit Ethernet (100GbE) optics
LightCounting predicted in its March 2016 "Mega Datacenter Optics" report that sales of 100GbE optics to cloud companies will reach $300 million in 2016. The market research firm says recent interviews suggest continued strong sales in the second half of the year, which the firm says bodes well for its year-long sales prediction.
As someone else in this forum said a few months ago, I think it's time to start trading OCLR and not just holding it. Buy it when it drops and sell it when it pops. It has been doing this regularly the last few months. I am committed to sell it the next time I am up a few thousand bucks. I see no reason to wait for a big gain that may never happen, regardless of who or what is preventing it.