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Oclaro, Inc. Message Board

  • o.investor o.investor Jan 31, 2013 7:29 PM Flag

    I think Ehud nailed it on the call - hello bankruptcy!

    I have gone over the numbers that Oclaro has been touting.

    They claim $10M in "synergy" savings - usual nonsense, if you go back and compare OCLR (Dec '12) + OPXT (Dec '12) then its true. SG&A+R&D is lower by little less than $10M.

    However, the bottom line has been shattered by taking over OPXT. Even with the "synergy savings" their expenses have gone up by $20M while gross profit has only gone up by $10M.

    You may have noticed that OCLR tried to sneak in new breakeven Qtr revenue of $175 - $180. This was $175 last qtr.

    Now lets get real here - OCLR has historically been a 20% margin company. OPXT was a 15% margin company. Lets buy into the bull that OCLR+OPXT can eventually get back to 20% gross margin.

    Now lets do the math - OCLR needs about $50M gross profit to breakeven (R&D+SG&A+interest expense). Pick your poison -

    OCLR can reach $50M breakeven point by -

    Rev: $250M, Gross Margin: 20%
    Rev: $180M, Gross Margin: 28%

    Both these scenarios look improbable for Oclaro. So get used to reality - OCLR will continue burning cash till they run out of it.

    Change of plans - stay as far away as possible from OCLR, only takeover rumors will lead to some spikes but the general trend is down down down.

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