Oclaro is in a highly cyclical business based around the carrier spending for new generation networks.
Take a look at the Oclaro 5 year stock chart to see the magnitude of the cycle.
There is a new up cycle predicted for 2014 based on the carrier plans for LTE Advanced networks with 3 - 10 times the speed for smartphones.
These are the networks from companies such as AT&T and China Mobile mentioned on the OCLR conference call. All mobile networks worldwide have a plan to upgrade to LTE Advanced so this is an industrywide move to faster networks.
The optical analysts predict that optical component sales will trend up in the 2nd half of 2013 with a strong 2014 based on these carrier plans.
Oclaro has some new highly competitive products especially in 100G and should benefit in the next cycle of carrier spending for optical.
Quoting Management: “Our financial results were at the lower end of guidance for the third quarter, in the face of continued softness in the telecommunications market.
Oclaro gets requests to design 4- and 8-degree nodes; with four- and eight-degree signifying the number of fibre pairs emanating from a node.
Oclaro's CFP2 is expected to be in production in the third quarter of 2013.
Cisco says the CPAK is more compact than the CFP2 transceiver with the company claiming that 12 or more transceivers will fit on a faceplate. "While the industry is leapfrogging the CFP with the CFP2, our CPAK leapfrogs the CFP2 because it is much more efficient from a size and power consumption perspective," says Sultan Dawood, a marketing manager at Cisco.
Vendors backing the CFP2 stress that the CPAK is only slighter smaller than the MSA module. "The CFP2 and the CPAK are both interim form factors pending when the CFP4 becomes available." says Avago's Tan. "Any product [like the CFP2] governed by an MSA is going to see strong market adoption."
AT&T's Project Velocity IP committed $14 billion within three years, spread over wireless and wireline broadband network improvements, with $8 billion funneled into its 4G wireless rollout.
The project is expected to boost AT&T's overall capital expenditures to $22 billion for each of the next three years, up from $19.7 billion in 2012.
"This is a major commitment to invest in 21st century communications infrastructure for the United States and bring high-speed Internet connectivity -- 4G LTE mobile and wireline IP broadband -- to millions more Americans," AT&T CEO Randall Stephenson said in a statement. "We have the opportunity to improve AT&T's revenue growth and cost structure for years to come."
If you are a believer in the stock it's buy and hold.