and the unexpected slowdown from csco's forward guidance I am surprised this is still above $2. Maybe oclr's new leader can pull that rabbit out of his hat and bring this company to profitability sooner than expected.
In the meantime if fnsr reports a drop in forward guidance tomorrow I would expect everyone can get both oclr and fnsr on the cheap cheap cheap come friday.
Cisco attributed part of lowered earnings to China’s anger toward NSA. Will this impact Oclaro in regards to sales to Chinese system makers? I guess we will hear more when Finisar reports on Thursday.
Qualcomm has a new website dedicated to what they call the 1000x data challenge.
While the Qualcomm focus is on building the wireless network, there will be requirements for a huge optical network upgrade.
Currently the mobile carriers worldwide are preparing new LTE Advanced networks starting in 2014. This is the optical upcycle on the horizon which will benefit OCLR.
"Mobile data traffic is exploding. Globally, the traffic has been doubling each year during the last few years. However, now the industry is preparing for an astounding 1000x increase. Qualcomm is leading the charge through its compelling technologies, path breaking innovations, and market leading products in preparing the industry to meet this “1000x challenge"
Re: While we can debate about the optical upcycle, once the headcount reduction to 1,500 happens then the stock can increase to $5.
Going to 1,500 employees is easier said than done. Case in point, Oclaro is maintaining staff on their Shenzhen facilities that should have been transferred to Malaysia on an outsource agreement started 2 YEARS AGO. "A train wreck" as described by one of the posters on this board. In addition, no sign of Oclaro cutting back at the executive level. They hired an executive Sales VP from the outside and a replacement for the internal CFO guy that was promoted. In my humble opinion there is nothing out there that gives me confidence that they can successfully reduce headcount in a meaningful way.
Also, as a reminder most of the proceeds from the sale of the amps business (86 million) went to pay off the bridge loans and the most recent quarterly loss. The next Oclaro sale will be their "self contianed" Japanese commercial division inherited from Opnext. After this sale there will be nothing more for Oclaro to sell.
The doom and gloom discussion for these optical plays has been going on ever since the bust. I think only JDSU with its huge cash pile was exempt. All others were on the brink at one point or another. As far as Finisar goes, if Intel is successful in its huge attempt to leapfrog the current tech and capture the data centers with its new silicon photonic wizardy gizmos, doom and gloom will surely return to the industry leader soon enough. As has been often said but seldom understood, this a difficult biz.
Cost reduction is the main issue now.
While we can debate about the optical upcycle, once the headcount reduction to 1,500 happens then the stock can increase to $5.
There are still several Finisar longs on this board who like to visit with doom and gloom about OCLR which is ironic considering their posts on the FNSR board.
To the Stockholders of Oclaro, Inc.:
The annual meeting of stockholders of Oclaro, Inc., a Delaware corporation (Oclaro, we, us or our), will be held on Tuesday, January 14, 2014, at 8:00 a.m., local time, at our corporate headquarters, 2560 Junction Avenue, San Jose, California, for the purpose of considering and voting upon the following matters:
1. To elect Kendall Cowan and Joel A. Smith III as Class III directors to serve three-year terms and until their successors are duly elected and qualified or until their earlier resignation or removal.
2. To approve the Fourth Amended and Restated 2001 Long-Term Stock Incentive Plan.
3. To conduct an advisory vote on the compensation of our named executive officers.
4. To ratify the selection of Grant Thornton LLP as our independent registered public accounting firm for the current fiscal year; and
5. To consider two stockholder proposals, if properly presented.
What could item 5 be?
My point is that if they, at least, scale their operating costs down to be INLINE with their current revenue then they can hum along just fine. The tick-tock aspect will no longer apply and if they need to be at flat revenue but cash flow positive then so be it. At least they will no longer be hemorrhaging via paychecks. My $5 target is just a revaluation based on expense reductions, only.
If you look at Finisar's telecom side (mostly acquired from Optium) they are currently more trim and lean than Oclaro will ever be able to achieve since the Opnext's production facility in Shenzhen remains in some sort of suspended status and it still the Italy fab and two in the UK. Finisar's margins on telco are in the mid 20's and that with its WSS/ROADMs --of which Oclaro doesn't have, so it will just be transceivers. Sorry, it doesn't add up...if it did Finisar would have margins ten basis points higher. Oclaro is counting on much larger volume than it will likely see. That is why this metro development is so crucial here.
I thought the same as you and that hasn't changed in 5+ years, until now. A 50% reduction in the workforce (reduction of 1500 employees) will save WELL over $100M per year which, in addition, to the reduction in operating costs from those 2 sold product lines, will sufficiently offset any of the negative cash flow. I think these guys will be cash flow positive by July and deep cash flow positive by September, when most of the severance payouts will be complete. The stock will be at least $5 by then and will be one of the most profitable optical component makers. I know this sounds f'n crazy to you but this new CEO means business and I think he's going to be successful.
Most of the long haul coherent has been provided by the top tier OEMs (Ciena, ALU, Huawei, & Infinera etc) to the largest carriers. In fact these carriers are now saying they want the same designs for their metro coherent optics, so that probably means that the top tier OEMs will also supply the bulk of metro as well as long haul. The remainder will be supplied by the merchant market modules from the OCs like Oclaro, JDSU, FNSR, Neophotonics, and several others. Believe me, by the time the OCs start supplying their merchant market wares, the margins will be as thin as on 10G. It is always the case. Nothing has changed for the better for the component vendors.
“For optical ports, 10G will remain the highest-volume speed, but 100G represents the area of the most dramatic growth. Service providers have indicated to us that by 2016, the majority of spending in long-haul networks will be on 100G.” you mean that says by 2016 it will be the majority of spending that doesn't mean there will be increases on the way.