Thursday, July 10, 2014
Upcoming Winter Shaping Up Similar to Last Winter; 2014-2015 Could Be More Severe
Note: The idea of this winter being more severe than last is a preliminary finding based on the work presented in this post. It is by no means set in stone, and is subject to revision.
After a look back at July 2013, I'm finding that July 2014 sea surface temperature anomalies are not only similar to last July, but could be foreshadowing a more severe winter than last.
(there is a detailed analysis in the article at the Weather Centre website)
It should be noted that the 100G modules have about twice the gross margins of the older 10G/40G modules and as the 100G module sales ramp in 2014 then OCLR can achieve profitability.
A profitable OCLR will get a much higher multiple of sales than the current valuation of the stock.
Who just said that if there is another cold winter, gas prices will be over $5 in 2015?
Optical components has a boom and bust cycle, and 100G is an upcycle still in the early days.
Recent product launches focus on 100G
Recent product launches concentrating on the 100G area promise to drive sales growth. In the telecom segment, Oclaro shipped its first prototypes of the new coherent CFP2 product, with volume production expected later this year. The recently launched micro ITLA and LIN modulators are seeing many design wins with customers and the company is ramping up production.
For the datacom segment, the company has been first to market with CFP2 product offering and is ramping up production in expectation of increased demand throughout the rest of 2014. Tunable SFP+ laser sampling is going on now, with volume production expected in the second half of 2014.
In conclusion of the future growth drivers, Oclaro now offers a complete 100G portfolio for long haul, metro and data center markets and are a leader in coherent applications. This should hopefully translate into 100G sales more than offsetting the fall of traditional 10G and 40G products, and increase margins as well.
"Currently 100G coherent technologies are at the beginning of what’s destined to become a prolific new network life cycle. In many ways, 100G is much like 10G was back in the early 2000s, when initial products were deployed in the long-haul and core portions of the network first, and then the base technology migrated out to, essentially, all parts of the optical transport network over time. This migration will happen to 100G coherent technology as well, as the product research and development (R&D) investments create solutions that fit across a wider range of network applications."
I just checked the Russell Indexes and Oclaro is listed for the 2000, 3000, Global, and Microcap Indexes. The only press release shows that Oclaro was added in 2010. Probably the Friday stock volume was related to a trade of the Oclaro shares between large hedge funds.
Current Quarter Estimates for XCO
In the past 30 days, 3 estimates have gone higher for EXCO Resources while none moved lower in the same time period. The trend has been pretty favorable too, with estimates increasing from 3 cents a share 30 days ago, to 4 cents today, a move of 33.3%.
Current Year Estimates for XCO
Meanwhile, EXCO Resources’ current year figures are also looking quite promising, with 3 estimates moving higher in the past month, compared to none moving lower. The consensus estimate trend has also seen a boost for this time frame, increasing from 18 cents per share 30 days ago to 20 cents per share today, an increase of 11.1%.
The stock has also started to move higher lately, adding 6.4% over the past four weeks, suggesting that investors are starting to take note of this impressive story.
The bigger question is who is buying all these shares after hours?
The price is holding up amazingly well for so much volume on a Friday afternoon.
There has been a pattern of short attacks in small cap stocks during the last two weeks with a big volume sell at the end of the day on Friday.
Last week after the attack on a number of stocks I was wondering why OCLR was ignored but today I got my answer.
Global sea surface temperature anomalies continue to point towards an increased likelihood for a cold winter ahead.
1. El Nino
It's been discussed countless times already by countless weather agencies and enthusiasts, but we'll discuss it again here. The anomalously warm waters appearing west of Ecuador, nicknamed the El Nino phenomenon, look to be a crucial piece to this puzzle indicating a chilly winter ahead. In typical El Nino situations, we tend to see warm weather confined to the North and West US regions, while cool anomalies prevail in the South and East. Considering the El Nino retains the highest confidence for still being present in the coming winter, confidence in a cooler than normal winter for the aforementioned regions rises in response.
2. Cooler than Normal West Pacific
This factor doesn't constitute an oscillation or index, per se, but will likely play into what we see happen this winter. The past cold season, I based the majority of my long range posts off of storms I was seeing hit Japan, based on the Typhoon Rule popularized by Joe Renken. It only takes a simple understanding of the relationship between high/low pressure patterns and sea surface anomalies to recognize what this means. The presence of below normal water temperatures extending eastward from Japan could very well mean that we see a stormy pattern over Japan this winter. Translating that through the Typhoon Rule, it means that the prospects of a stormy (and consequentially cooler) winter are enhanced.
3. Positive Water Temperature Anomalies in the Gulf of Alaska
In addition to the waters off Ecuador, the Gulf of Alaska is also experiencing above normal water temperatures.
"100G spending worldwide in 2013 was breathtaking, with total port shipments tripling during the year. This equates to around $2 billion in spending related to 100G. That's a lot – roughly 20% of all WDM spending!" said Andrew Schmitt, principal analyst for optical at Infonetics Research.
PLANO, TX--(Marketwired - June 20, 2014) - Torchlight Energy Resources, Inc. (TRCH) ("Torchlight Energy" or "the Company"), a rapidly growing mid-continent oil and gas company, today announced that it will be added to the Russell Microcap® Index when Russell Investments reconstitutes its comprehensive set of U.S. and global equity indexes on June 27th.
"We are pleased to have been recognized and added to the Russell Microcap Index," stated John Brda, Torchlight Energy's President. This inclusion represents another milestone in the growth of our company and we look forward to the additional exposure within the investment community and trading liquidity that it should provide."
The membership in the Russell Microcap Index lasts for a minimum of one year and generates additional inclusion in certain indexes. Russell Investments determines membership for its equity indexes based on objective, market-capitalization other attributes. Russell indexes are widely used by investment managers and institutional investors for index funds and as benchmarks for active investment strategies
What Can We Expect This Winter?
It's too early to make maps for this upcoming winter, but we have an abundance of hints we can use for some early forecasting. Predictions for temperature and precipitation will be given. Anomalies in confidence will be listed; if no confidence level is listed, confidence is average.
For the Pacific Northwest: A warmer than normal winter with around average precipitation is currently favored, due to the state of the Pacific Ocean and choice analog year. Snowfall is projected to be slightly above normal.
For the Southwest: A warmer than normal winter with above average precipitation is currently favored, due to expected high pressure along the West Coast and an enhanced subtropical jet stream. Snowfall is projected to be around average.
For the North Plains: A cooler than normal winter with average precipitation is currently favored, due to the expected Pacific set-up and choice analog years. Snowfall is projected to be around average.
For the South Plains: A cooler than normal winter with slightly below average precipitation is currently favored. Snowfall is projected to be slightly above average.
For the Midwest and Great Lakes: A slightly cooler than normal winter with around average precipitation is currently favored. Low confidence. Snowfall is projected to be below normal.
For the Ohio Valley: A slightly cooler than normal winter with slightly below average precipitation is currently favored. Snowfall is projected to be slightly below normal.
For the Southeast: A cooler than normal winter with wetter than normal precipitation is currently favored. Higher than normal confidence. Snowfall is projected to be above normal.
For the Mid-Atlantic: A cooler than normal winter with above average precipitation is currently favored. Snowfall is projected to be above normal.
For the Northeast: A cooler than normal winter with above average precipitation is currently favored. Snowfall is projected to be above normal
The FNSR results are actually very positive for OCLR since the outlook for sales growth was excellent. Concerning the FNSR drop in gross margin from 35% to 31%, the OCLR goal is to increase average gross margins from 12% to 25% on higher margin 100G products and cost reductions.
FNSR analysts are projecting that their margins will increase later in 2014 as more 100G products are sold.
Optical components are a cyclical business and there is an upcycle in progress with a transition from 10G and 40G to 100G. This past quarter just showed the transition in progress.
Shares of fiber-optic networking specialist Finisar (NASDAQ: FNSR ) fell as much as 20% in after-market trading today, following the release of disappointing fourth-quarter results.
Finisar's sales increased 26% year-over-year to $306 million, exceeding Wall Street's $303 million consensus estimate. On the bottom line, non-GAAP earnings landed at $0.36 per diluted share, up from $0.20 per share in the year-ago period. Here, analysts were looking for $0.38 per share.
Both earnings and sales fell within management's guidance ranges for the quarter, albeit below the midpoint of the earnings span.
In commentary on the quarter, management preferred to focus on discussing strong sales while avoiding the reasons behind the disappointing earnings. Adjusted earnings did not include an $8.3 million gain on the sale of Finisar Korea during the quarter. If included, this line item would have added $0.08 per share to the bottom line.
Looking ahead, Finisar expects first-quarter sales of approximately $327 million and adjusted earnings near $0.32 per share. That's a mixed bag, as analysts currently see earnings of $0.41 per share on roughly $317 million in sales for this period/
Finisar CEO Eitan Gartel sees further growth on the horizon, driven by higher-speed optical transceivers. "Demand for transceivers operating at 10Gb/s and faster continued to be strong during the quarter," Gartel said in a prepared statement. "Demand was also strong for our transceivers for LTE wireless applications."
Iraq appears to finally be splitting apart along ethnic lines - Sunni and #$%$. This means higher world oil prices for sometime with the Saudi's at full production already so there is no spare world capacity.
Amazon's (NASDAQ:AMZN) fabled smartphone, which the retailing giant will likely introduce at an event on June 18, will use Omron's Okao Vision face sensing technology for its 3D user interface, according to a TechCrunch report.
The report, citing an unnamed source, said that the device will sport four front-mounted infrared cameras to scan users' faces and movements. According to the report, the Japanese firm's technology was modified by Amazon so that the gadget could produce its unique stereoscopic effects from a standard LCD screen.
The report, corroborating others, including from BGR, said that a user will be able to tilt the smartphone or their head left or right to browse and access hidden side panels on the screen. Those details seem consistent with actors' reactions in a video Amazon released to preview the device, which showed people moving their heads around to view something off-screen. (Business Insider noted that a very brief shot of the phone can be seen in one of the frames of the video, showing a black smartphone with what appears to be a headphone jack on top.)
Further, TechCrunch notes that the Okao software figures out the X, Y, and Z coordinates of a person's face or motion using the cameras, and the phone's gyroscopic sensor and accelerometer let it provide a faster reaction and greater accuracy to produce the parallax 3D effect, which does not require users to wear glasses.