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FNSR: Finisar Corp.
High Momentum Stock
Even after over 400% gains, I believe Finisar has more to go. Read why.
FNSR: Finisar Corporation [3/6/06]
Finisar designs, manufactures and markets fiber-optic subsystems and network performance test and monitoring systems that enable high-speed data communications over local area networks (LANs), storage area networks (SANs) and metropolitan access networks (MANs). The Company is focused on the application of digital fiber optics to provide a broad line of high-performance, reliable, value-added optical subsystems for data networking and storage equipment manufacturers. Its line of optical subsystems supports a wide range of network applications, transmission speeds, distances, physical mediums and configurations.
See FNSR - Finisar Corporation Charts
Discuss and read more about Finisar with others here.
HIGH MOMENTUM STOCK RISKS
High momentum stocks are risky, especially if you don't know what you are doing. If you are the type who buys a stock then sells if it drops 40% rather than buying more because it is on sale, then stay away. Others use "stop losses" to protect themselves from excessive losses in momentum stocks. Many successful traders put in a sell limit order perhaps 4 to 8% below their buy in price to protect themselves from massive losses but this can lead to a series of loss after loss for new investors.
And
DISCLAIMER: I hold Finisar Corp. in my personal account and my newsletter. I have substantial profits at this time in both. While I may like the stock today for the future, this could change at any time and I am under no obligation to tell anyone but my newsletter subscribers when this happens. Buy or sell at your own risk and DO NOT ASSUME ANYTHING! Do your own research or talk to your financial advisor first before buying.
With that out of the way....
MY CURRENT OUTLOOK
In my November 2005 newsletter when Finisar was at $1.32, I wrote of Finisar: "Total revenue now is at a record level yet we are at a fraction of its $30 IPO price! Currently I hold 5,500 shares at a "break-even" point of $1.42. I last added 1,000 shares at $1.01." Today Finisar opened at $4.38 and is down a bit as I write this article.
I still have Finisar in my newsletter and personal account because I think it could return to $20 or more. Finisar had an IPO (Initial Public Offering) when it looked like the internet was growing gangbusters. It turned out WorldCom was lying about their reported "profitable growth" and the whole market collapsed. Back in 2001 analysts were saying there was so much excess capacity in telecom that fibers would remain dark until 2007. Well, today it is early 2006 and things like video IPods and video to cell phones have filled the dark fibers with data. Now telecom companies are starting to scramble to build more capacity, which is very good news for companies like Finisar.
See FNSR - Finisar Corporation Charts
KIRK'S INVESTMENT NEWSLETTER
My newsletter offers quite a bit of useful information including two recommended core portfolios composed of index funds or ETFs, tables, discussion of interest rates, The Fed Model, etc. that many say are worth the price of the subscription before accounting for the fantastic returns in my explore portfolio.
DISCLAIMER: Answers & my words are general in nature, are not meant as specific investment advice, and do not necessarily represent the opinion of anyone but Kirk. Individuals should consult with their own advisors for specific investment advice.
The copyright of the article FNSR: Finisar Corp. in Investment is owned by Kirk Lindstrom. Permission to republish FNSR: Finisar Corp. in print or online must be granted by the author in writing.
49 Comments
Comments
Mar 7, 2006 6:08 AM
PEIC :
AP
Finisar Gains As Analyst Starts Coverage
Monday March 6, 3:26 pm ET
Finisar, Multiband Shares Up After Analysts Initiate Coverage Ay 'Buy'
NEW YORK (AP) -- Shares of Finisar Corp. climbed to a 52-week high Monday, after an analyst projected growth and saw the company's aggressive restructuring efforts improving its turnaround prospects.
Jefferies & Co. initiated coverage on the fiber-optic network equipment maker, with a "Buy" rating. Last week, the company posted a better-than-expected fiscal third-quarter profit, following a loss in the prior-year period.
Click Here
Analyst John Lau, who set a target price for the stock at $6, said in a client note the Sunnyvale, Calif., company is well positioned to take advantage of the fast-growing fiber-optic datacom market.
Shares were up 49 cents, or 12 percent, to $4.57 in afternoon trading on the Nasdaq after earlier changing hands as high as $4.82, eclipsing the previous high of $4.32, reached Friday. The prior high came after the company posted its third-quarter results and shares gained 45 percent, at the time their highest in more than 2 years.
Lau wrote there has been "significant consolidation" within fiber optic component suppliers in the past few years. The major suppliers left in the datacom area, he added, include Finisar, JDS Uniphase Corp. and privately held Avago Technologies Inc., the former chip products group of Agilent Technologies Inc. Finisar, he added, has made seven acquisitions in this area since 2001.
"In addition, with customers narrowing the number of suppliers, we believe that FNSR is in a strong position to capitalize from these improving market trends," the analyst wrote.
Jefferies also initiated coverage of Multiband Corp., a communications service provider offering high-speed Internet access, regular and digital cable programming to "multiple dwelling units" such as apartment complexes
Analyst David J. Brenner initiated coverage with a "Buy" rating and set his target price at $2. Shares climbed 11 cents, or 9.2 percent, to $1.30 in afternoon trading on the Nasdaq. In the past 52 weeks, the stock has changed hands between 95 cents and $1.75.
Multiband is "rapidly adding subscribers, ending the third quarter with over 35,000 total customers versus 26,097 at the start of 2005," the analyst wrote in a client note.
The New Hope, Minn., company, he added, has spent "much time and money" on putting the infrastructure in place to handle future business. T
Finisar Gains As Analyst Starts Coverage
Monday March 6, 3:26 pm ET
Finisar, Multiband Shares Up After Analysts Initiate Coverage Ay 'Buy'
NEW YORK (AP) -- Shares of Finisar Corp. climbed to a 52-week high Monday, after an analyst projected growth and saw the company's aggressive restructuring efforts improving its turnaround prospects.
Jefferies & Co. initiated coverage on the fiber-optic network equipment maker, with a "Buy" rating. Last week, the company posted a better-than-expected fiscal third-quarter profit, following a loss in the prior-year period.
Click Here
Analyst John Lau, who set a target price for the stock at $6, said in a client note the Sunnyvale, Calif., company is well positioned to take advantage of the fast-growing fiber-optic datacom market.
Shares were up 49 cents, or 12 percent, to $4.57 in afternoon trading on the Nasdaq after earlier changing hands as high as $4.82, eclipsing the previous high of $4.32, reached Friday. The prior high came after the company posted its third-quarter results and shares gained 45 percent, at the time their highest in more than 2 years.
Lau wrote there has been "significant consolidation" within fiber optic component suppliers in the past few years. The major suppliers left in the datacom area, he added, include Finisar, JDS Uniphase Corp. and privately held Avago Technologies Inc., the former chip products group of Agilent Technologies Inc. Finisar, he added, has made seven acquisitions in this area since 2001.
"In addition, with customers narrowing the number of suppliers, we believe that FNSR is in a strong position to capitalize from these improving market trends," the analyst wrote.
Jefferies also initiated coverage of Multiband Corp., a communications service provider offering high-speed Internet access, regular and digital cable programming to "multiple dwelling units" such as apartment complexes
Analyst David J. Brenner initiated coverage with a "Buy" rating and set his target price at $2. Shares climbed 11 cents, or 9.2 percent, to $1.30 in afternoon trading on the Nasdaq. In the past 52 weeks, the stock has changed hands between 95 cents and $1.75.
Multiband is "rapidly adding subscribers, ending the third quarter with over 35,000 total customers versus 26,097 at the start of 2005," the analyst wrote in a client note.
The New Hope, Minn., company, he added, has spent "much time and money" on putting the infrastructure in place to handle future business. T
Mar 7, 2006 6:10 AM
PEIC :
Press Release Source: Finisar Corporation
Finisar Demonstrates a Broad Range of Technology and Product Innovations at OFC/NFOEC
Tuesday March 7, 8:00 am ET
Finisar to Demonstrate Leading-Edge Optical Product Capabilities Including the Industry's First Fully-Compliant 10GBASE-LRM X2 Transponder Module
SUNNYVALE, Calif.--(BUSINESS WIRE)--March 7, 2006--Finisar Corporation (Nasdaq:FNSR - News), a technology leader and pioneer in gigabit fiber-optics solutions for high-speed data and telecommunications networks, today announced plans to demonstrate the industry's first fully compliant 10GBASE-LRM X2 optical module at the 2006 Optical Fiber Communication Conference & Exposition and the National Fiber Optic Engineers Conference (OFC/NFOEC) this week in Anaheim, Calif. This product enables transmission of high-speed 10Gb/s data traffic at distances in excess of 220 meters over the multimode fiber (MMF) currently installed in most enterprises and buildings. In addition, Finisar will also exhibit the industry's first long distance 4Gb/s Fibre Channel CWDM SFP transceiver targeted at disaster recovery and real-time data mirroring applications, and the recently acquired Kodiak 40Gb/s short-reach transponder. These demonstrations reflect Finisar's proven expertise in enabling innovative fiber-optic solutions for high-speed data and telecommunications networks.
ADVERTISEMENT
Finisar's 10GBASE-LRM X2 transponder uses Electronic Dispersion Compensation (EDC) technology to enable 220 meter transmission over multimode fiber, and is designed in accordance with the emerging IEEE 802.3aq Draft 3.1 standard. With less than 4W total power consumption, this transponder is ideal for use in networking systems such as Ethernet switches, routers and NIC cards.
Finisar also plans to demonstrate a long-reach 4Gb/s Fibre Channel CWDM SFP, enabling service providers to combine native SAN and Ethernet on a single fiber and transport the data over distances up to 80km. The transceivers are suited for applications such as Fibre Channel switches and multiservice equipment that require 4Gb/s Fibre Channel transport or link aggregation of multiple sources (such as 1/2 Gb/s Fibre Channel and Gigabit Ethernet) over long distances.
Furthering the company's commitment to high-speed optical transport, Finisar's Kodiak 40Gb/s short reach transponder provides outstanding jitter generation and receiver sensitivity performance. The Kodiak 40Gb/s transponder supports VSR client-side
Finisar Demonstrates a Broad Range of Technology and Product Innovations at OFC/NFOEC
Tuesday March 7, 8:00 am ET
Finisar to Demonstrate Leading-Edge Optical Product Capabilities Including the Industry's First Fully-Compliant 10GBASE-LRM X2 Transponder Module
SUNNYVALE, Calif.--(BUSINESS WIRE)--March 7, 2006--Finisar Corporation (Nasdaq:FNSR - News), a technology leader and pioneer in gigabit fiber-optics solutions for high-speed data and telecommunications networks, today announced plans to demonstrate the industry's first fully compliant 10GBASE-LRM X2 optical module at the 2006 Optical Fiber Communication Conference & Exposition and the National Fiber Optic Engineers Conference (OFC/NFOEC) this week in Anaheim, Calif. This product enables transmission of high-speed 10Gb/s data traffic at distances in excess of 220 meters over the multimode fiber (MMF) currently installed in most enterprises and buildings. In addition, Finisar will also exhibit the industry's first long distance 4Gb/s Fibre Channel CWDM SFP transceiver targeted at disaster recovery and real-time data mirroring applications, and the recently acquired Kodiak 40Gb/s short-reach transponder. These demonstrations reflect Finisar's proven expertise in enabling innovative fiber-optic solutions for high-speed data and telecommunications networks.
ADVERTISEMENT
Finisar's 10GBASE-LRM X2 transponder uses Electronic Dispersion Compensation (EDC) technology to enable 220 meter transmission over multimode fiber, and is designed in accordance with the emerging IEEE 802.3aq Draft 3.1 standard. With less than 4W total power consumption, this transponder is ideal for use in networking systems such as Ethernet switches, routers and NIC cards.
Finisar also plans to demonstrate a long-reach 4Gb/s Fibre Channel CWDM SFP, enabling service providers to combine native SAN and Ethernet on a single fiber and transport the data over distances up to 80km. The transceivers are suited for applications such as Fibre Channel switches and multiservice equipment that require 4Gb/s Fibre Channel transport or link aggregation of multiple sources (such as 1/2 Gb/s Fibre Channel and Gigabit Ethernet) over long distances.
Furthering the company's commitment to high-speed optical transport, Finisar's Kodiak 40Gb/s short reach transponder provides outstanding jitter generation and receiver sensitivity performance. The Kodiak 40Gb/s transponder supports VSR client-side
Mar 17, 2006 9:14 AM
Single Engle :
Through the process of creating the new page it seams as if there is some
threads that could be cleaned up. for instance this thread is the same as
http://investment.suite101.com/discussion.cfm/131
Except with :
Just trying to help with housecleaning
Except with :
Just trying to help with housecleaning
Mar 18, 2006 7:21 PM
Single Engle :
I'll do what I can but I have to admit theres a lot of mush there right
now.
Mar 22, 2006 12:01 PM
Single Engle :
PERSPECTIVE ON NOTE CONVERSION
by: stk2stk
Long-Term Sentiment: Strong Buy 03/22/06 02:01 pm
Msg: 219995 of 220051
Seems that some shorts want to hang ther hats on note conversions...well see what you think of this:
The subject of convertible notes can be confusing. First, fnsr already received the cash from issuing these notes a long time ago. The conversion of these notes to shares means that once they convert the number
of shares would increase AND interest expense would go away improving FNSR's bottom line. People typically focus only on the former. FNSR currently pays around $9M per year in interest expense which would disappear if
both notes converted.
To understand the impact of everything converting, HYPOTHETICALLY speaking...
projected EPS for FY07 was $.15 per share (mid-point of the range that was discussed at the Analyst Day although FNSR's analysts have her a little higher). Assuming that there are a little over 300M shares outstanding (call
it 300M) that's net income (on a non-GAAP basis which is how FNSR's analysts follow them) of about $45M which includes the $9M of interest expense.
Let's assume that all the notes convert. You would add another 58.5M shares ($100M/$5.52 exercise price and $150M/$3.71 exercise price). That would give FNSR a total of 358.5M shares. But then consider that FNSR's net income would rise from $45M to $54M because she no longer pays any interest expense. That would mean that her EPS would stay the same at about $.15 per share for FY07 ($54M/358.5M shares). Said another way, while the number of shares increases by about 20%, our net income would increase by about 20% as well. As underlying profitability rises, dilution
can start to set in but you can play with the numbers and see that there is not an enormous impact if everything were to convert. If you
actually looked at the effect of both converts by themselves, you would find that the conversion of the $150M notes would be slightly dilutive by less than a penny while the conversion of the $100M notes would be
slightly accretive by less than a penny (the two offset). In addition,FNSR's overall risk profile probably drops which could have a positive impact on the stock price although not sure what that would be.
Incidentally, while not intuitively obvious, even though FNSR stock price is trading over $3.71 per share, it appears that the $150M
noteholders may not convert because of the option value inherent in continuing
t
by: stk2stk
Long-Term Sentiment: Strong Buy 03/22/06 02:01 pm
Msg: 219995 of 220051
Seems that some shorts want to hang ther hats on note conversions...well see what you think of this:
The subject of convertible notes can be confusing. First, fnsr already received the cash from issuing these notes a long time ago. The conversion of these notes to shares means that once they convert the number
of shares would increase AND interest expense would go away improving FNSR's bottom line. People typically focus only on the former. FNSR currently pays around $9M per year in interest expense which would disappear if
both notes converted.
To understand the impact of everything converting, HYPOTHETICALLY speaking...
projected EPS for FY07 was $.15 per share (mid-point of the range that was discussed at the Analyst Day although FNSR's analysts have her a little higher). Assuming that there are a little over 300M shares outstanding (call
it 300M) that's net income (on a non-GAAP basis which is how FNSR's analysts follow them) of about $45M which includes the $9M of interest expense.
Let's assume that all the notes convert. You would add another 58.5M shares ($100M/$5.52 exercise price and $150M/$3.71 exercise price). That would give FNSR a total of 358.5M shares. But then consider that FNSR's net income would rise from $45M to $54M because she no longer pays any interest expense. That would mean that her EPS would stay the same at about $.15 per share for FY07 ($54M/358.5M shares). Said another way, while the number of shares increases by about 20%, our net income would increase by about 20% as well. As underlying profitability rises, dilution
can start to set in but you can play with the numbers and see that there is not an enormous impact if everything were to convert. If you
actually looked at the effect of both converts by themselves, you would find that the conversion of the $150M notes would be slightly dilutive by less than a penny while the conversion of the $100M notes would be
slightly accretive by less than a penny (the two offset). In addition,FNSR's overall risk profile probably drops which could have a positive impact on the stock price although not sure what that would be.
Incidentally, while not intuitively obvious, even though FNSR stock price is trading over $3.71 per share, it appears that the $150M
noteholders may not convert because of the option value inherent in continuing
t
Mar 26, 2006 9:21 AM
Single Engle :
by: ken_m_johns
Long-Term Sentiment: Strong Buy 03/25/06 12:39 pm
Msg: 221760 of 221833
Here's a website to help you calculate the fair value of a stock:
http://www.moneychimp.com/articles/valuation/dcf.htm
And here's an explanation for how it works, if you care to know:
http://www.moneychimp.com/articles/finworks/fmvaluation.htm
I would caution you about using this to compute a fair value for FNSR right now. Because FNSR is just transitioning from losses to profits (we expect earnings for the fiscal year ending next month of $0.03 or $0.04 per share), the short term earnings growth is huge. I'm projecting about 700% earnings growth between FY06 and FY07. I expect FY08 to have earnings growth of at least 50%, and FY09 about 33%; after that, it's anybody's guess. Thus, the calculator on the first website above won't help you very much.
Also, the fair value depends a great deal on what you expect to return. Historically, the S&P500 has returned about 11% per year. Will it do that well in the next two or three years? No one knows. If we assume that it will, and we assume that after FY09 Finisar earnings will grow at a flat rate of 5% per year into infinity, you get the following valuation:
P = .03 + (.24*.89) + (.36*.79) + (.48*.705) + (.504*.63/.06)
Theoretically, you should also add in the book value of the company, as per the balance sheet. I usually discount intangibles and good will, which right now gives FNSR a tangible book value of about $0.03 per share. All together, I get a fair value of $6.19 per share as of the end of April.
Note that if FNSR performs over the next year exactly as I expect it to, the fair value of the stock will appreciate:
P2007 = .24 + (.36*.89) + (.48*.79) + (.504*.705/.06) + .06
Thus, P2007 = 6.92 according to this calculation, and assuming that there are no further improvements to the bottom line, and no additional clarity on future earnings beyond 2009. If FNSR continues to raise estimates and outperform, the fair value next year could be significantly higher.
These calculations are very sensitive to the assumptions you make. For example, if you expect the S&P to only make an 8% return in the future, the fair value of FNSR would increase to $12.96 right now. Or if you keep the S&P at 11% but raise your estimate of FNSR's future earnings to stabilize at 7% per year, the fair value today would be $8.80.
This may be very confusing to you by now--as you can see, finding a valuation fo
Long-Term Sentiment: Strong Buy 03/25/06 12:39 pm
Msg: 221760 of 221833
Here's a website to help you calculate the fair value of a stock:
http://www.moneychimp.com/articles/valuation/dcf.htm
And here's an explanation for how it works, if you care to know:
http://www.moneychimp.com/articles/finworks/fmvaluation.htm
I would caution you about using this to compute a fair value for FNSR right now. Because FNSR is just transitioning from losses to profits (we expect earnings for the fiscal year ending next month of $0.03 or $0.04 per share), the short term earnings growth is huge. I'm projecting about 700% earnings growth between FY06 and FY07. I expect FY08 to have earnings growth of at least 50%, and FY09 about 33%; after that, it's anybody's guess. Thus, the calculator on the first website above won't help you very much.
Also, the fair value depends a great deal on what you expect to return. Historically, the S&P500 has returned about 11% per year. Will it do that well in the next two or three years? No one knows. If we assume that it will, and we assume that after FY09 Finisar earnings will grow at a flat rate of 5% per year into infinity, you get the following valuation:
P = .03 + (.24*.89) + (.36*.79) + (.48*.705) + (.504*.63/.06)
Theoretically, you should also add in the book value of the company, as per the balance sheet. I usually discount intangibles and good will, which right now gives FNSR a tangible book value of about $0.03 per share. All together, I get a fair value of $6.19 per share as of the end of April.
Note that if FNSR performs over the next year exactly as I expect it to, the fair value of the stock will appreciate:
P2007 = .24 + (.36*.89) + (.48*.79) + (.504*.705/.06) + .06
Thus, P2007 = 6.92 according to this calculation, and assuming that there are no further improvements to the bottom line, and no additional clarity on future earnings beyond 2009. If FNSR continues to raise estimates and outperform, the fair value next year could be significantly higher.
These calculations are very sensitive to the assumptions you make. For example, if you expect the S&P to only make an 8% return in the future, the fair value of FNSR would increase to $12.96 right now. Or if you keep the S&P at 11% but raise your estimate of FNSR's future earnings to stabilize at 7% per year, the fair value today would be $8.80.
This may be very confusing to you by now--as you can see, finding a valuation fo
Mar 26, 2006 9:23 AM
Single Engle :
by: ken_m_johns
Long-Term Sentiment: Strong Buy 03/26/06 10:26 am
Msg: 221823 of 221833
One more thought about valuation. For companies in transition from losses to earnings, some analysts like to use a multiple of revenue as a measure of the company's value, instead of discounted future earnings. If you listened to Jim Cramer when he recommended Avanex, this was the measure he used to compare Avanex to its peers. Right now, here are the valuations of several FO companies, compared to their respective annual sales:
Ticker . . . . Price/Sales (ttm) . . . . EPS (ttm)
AFOP . . . . . . . 3.92 . . . . . . . . . . -0.07
AVNX . . . . . . . 2.59 . . . . . . . . . . -0.67
BKHM . . . . . . . 1.93 . . . . . . . . . . -5.05
FNSR . . . . . . . 4.32 . . . . . . . . . . -0.23
JDSU . . . . . . . 7.23 . . . . . . . . . . -0.19
MRVC . . . . . . . 1.51 . . . . . . . . . . -0.16
OCPI . . . . . . . 5.91 . . . . . . . . . . 0.02
STLW . . . . . . . 1.35 . . . . . . . . . . -0.37
Thus, from the looks of this, JDSU is the most expensive of the group with respect to its annual sales, while BKHM and AVNX are more attractively priced.
However, I believe that Cramer is mistaken to use price/sales as a measure of relative value because the different companies have different business models. His assumption is that FO components are commodities, and there is very little to distinguish the products of one company over another. Further, he assumes that once all the transitional costs are behind, the production costs for each company will be roughly similar, so their profit margins should also be about the same.
This is where he makes his big mistake. By moving to contract manufacturing, AVNX will have production costs that are highly scalable--they won't move up or down very much with the volume of production. However, margins will also be compressed because the companies doing the manufacturing want to make a profit as well--so they will be absorbing some of the margin.
In contrast, FNSR has achieved a high level of vertical integration, so instead of paying others to do manufacturing, they are doing it themselves and keeping the profits. FNSR's approach is potentially more profitable, but it is also more sensitive to risks associated with volume--if their manufacturing plant goes idle because of a glut of components, their fixed costs of maintaining the plant remain, so their profit margin can plunge. On the other hand, in a time of increasing production a
Long-Term Sentiment: Strong Buy 03/26/06 10:26 am
Msg: 221823 of 221833
One more thought about valuation. For companies in transition from losses to earnings, some analysts like to use a multiple of revenue as a measure of the company's value, instead of discounted future earnings. If you listened to Jim Cramer when he recommended Avanex, this was the measure he used to compare Avanex to its peers. Right now, here are the valuations of several FO companies, compared to their respective annual sales:
Ticker . . . . Price/Sales (ttm) . . . . EPS (ttm)
AFOP . . . . . . . 3.92 . . . . . . . . . . -0.07
AVNX . . . . . . . 2.59 . . . . . . . . . . -0.67
BKHM . . . . . . . 1.93 . . . . . . . . . . -5.05
FNSR . . . . . . . 4.32 . . . . . . . . . . -0.23
JDSU . . . . . . . 7.23 . . . . . . . . . . -0.19
MRVC . . . . . . . 1.51 . . . . . . . . . . -0.16
OCPI . . . . . . . 5.91 . . . . . . . . . . 0.02
STLW . . . . . . . 1.35 . . . . . . . . . . -0.37
Thus, from the looks of this, JDSU is the most expensive of the group with respect to its annual sales, while BKHM and AVNX are more attractively priced.
However, I believe that Cramer is mistaken to use price/sales as a measure of relative value because the different companies have different business models. His assumption is that FO components are commodities, and there is very little to distinguish the products of one company over another. Further, he assumes that once all the transitional costs are behind, the production costs for each company will be roughly similar, so their profit margins should also be about the same.
This is where he makes his big mistake. By moving to contract manufacturing, AVNX will have production costs that are highly scalable--they won't move up or down very much with the volume of production. However, margins will also be compressed because the companies doing the manufacturing want to make a profit as well--so they will be absorbing some of the margin.
In contrast, FNSR has achieved a high level of vertical integration, so instead of paying others to do manufacturing, they are doing it themselves and keeping the profits. FNSR's approach is potentially more profitable, but it is also more sensitive to risks associated with volume--if their manufacturing plant goes idle because of a glut of components, their fixed costs of maintaining the plant remain, so their profit margin can plunge. On the other hand, in a time of increasing production a
Mar 26, 2006 9:24 AM
Single Engle :
by: ken_m_johns
Long-Term Sentiment: Strong Buy 03/26/06 10:28 am
Msg: 221824 of 221833
As a further illustration that sales are not always the best measure for determining the market value of a company, consider Microsoft and Google. Microsoft has a mature growth curve, and a profit margin of nearly 32%. Google is growing rapidly, and has a profit margin of 24%:
Ticker . . . . Price/Sales (ttm) . . . . EPS (ttm)
MSFT . . . . . . . 6.71 . . . . . . . . . . 1.21
GOOG . . . . . . . 16.55 . . . . . . . . . . 5.02
In this comparison, growth trumps profit margin as a determinant of price, so Google has a much higher price/sales ratio. Right now, the FO component market is in a high-growth phase, and FNSR is growing sales faster than anyone else, meaning it is taking market share from its competitors. FNSR may never see 32% profit margins, but it is headed for 15% margins. The other companies have not yet provided guidance for their long-term profit margins--they are just trying to break even at this point.
Given the uncertainty of profitability for AVNX and BKHM, it is appropriate that they have lower price/sales ratios than FNSR. The only reason JDSU has a higher ratio than FNSR is that JDSU is considered the market leader, and so theoretically it has greater potential for profitability. However, FNSR has closed the sales gap significantly in the last two years, it is growing faster, and it is already profitable, while JDSU is still trying to get there. IMO both companies will be trading at about the same price/sales ratio later this year--and both are in a trend of moving to a higher ratio.
The case for AVNX and BKHM is less certain. Both companies did transactions recently that have diluted their shares. Taking these transactions into account, their respective price/sales ratios are already significantly higher than what is being reported by Yahoo (the figures I used in my last post); we'll have to wait until the next quarterly report to find out how much. And if they are unable to make the transition to profitability, or if they remain at break-even without progressing to higher profit margins, their price/sales ratio could fall.
All things considered, I'd say FNSR is the most attractive investment opportunity in the FO components sector.
Long-Term Sentiment: Strong Buy 03/26/06 10:28 am
Msg: 221824 of 221833
As a further illustration that sales are not always the best measure for determining the market value of a company, consider Microsoft and Google. Microsoft has a mature growth curve, and a profit margin of nearly 32%. Google is growing rapidly, and has a profit margin of 24%:
Ticker . . . . Price/Sales (ttm) . . . . EPS (ttm)
MSFT . . . . . . . 6.71 . . . . . . . . . . 1.21
GOOG . . . . . . . 16.55 . . . . . . . . . . 5.02
In this comparison, growth trumps profit margin as a determinant of price, so Google has a much higher price/sales ratio. Right now, the FO component market is in a high-growth phase, and FNSR is growing sales faster than anyone else, meaning it is taking market share from its competitors. FNSR may never see 32% profit margins, but it is headed for 15% margins. The other companies have not yet provided guidance for their long-term profit margins--they are just trying to break even at this point.
Given the uncertainty of profitability for AVNX and BKHM, it is appropriate that they have lower price/sales ratios than FNSR. The only reason JDSU has a higher ratio than FNSR is that JDSU is considered the market leader, and so theoretically it has greater potential for profitability. However, FNSR has closed the sales gap significantly in the last two years, it is growing faster, and it is already profitable, while JDSU is still trying to get there. IMO both companies will be trading at about the same price/sales ratio later this year--and both are in a trend of moving to a higher ratio.
The case for AVNX and BKHM is less certain. Both companies did transactions recently that have diluted their shares. Taking these transactions into account, their respective price/sales ratios are already significantly higher than what is being reported by Yahoo (the figures I used in my last post); we'll have to wait until the next quarterly report to find out how much. And if they are unable to make the transition to profitability, or if they remain at break-even without progressing to higher profit margins, their price/sales ratio could fall.
All things considered, I'd say FNSR is the most attractive investment opportunity in the FO components sector.
Apr 18, 2006 4:05 AM
robroy :
Finisar Follows A Path To Its Next Double
Charlie Burger, Gilder Technology Report 04.18.06, 6:00 AM ET
GREAT BARRINGTON, Mass. -
Since George Gilder added Finisar to the Gilder Technology Report "Telecom Technologies" list on Dec. 22, the stock has more than doubled. Is it still a good value?
Fiber optics are on fire, but so are some specialized semiconductor companies. Click here for three to buy now in the Gilder Technology Report.
The No. 2 optical components supplier behind JDS Uniphase (nasdaq: JDSU - news - people ), Finisar (nasdaq: FNSR - news - people ) generates 90% of sales from optical transceivers. The company ranks first in SANs (storage area networks), second in LANs (local area networks) and has a growing MANs (metro area networks) business. Cisco Systems (nasdaq: CSCO - news - people ) is Finisar's largest customer, and Finisar in turn is the largest optical supplier to Cisco. April should bring the 11th consecutive sequential revenue rise, hoisting sales for fiscal year 2006 to $362 million, up 29% from 2005 and double the level in 2004.
Online applications are sending the SAN market into orbit. Brocade (nasdaq: BRCD - news - people ), EMC (nyse: EMC - news - people ) and QLogic (nasdaq: QLGC - news - people ) plan to double the size of their installations over the next year and continue to add at a compound annual rate of 70% thereafter. The uptake of 4 Gbps networks accelerated unexpectedly the last few months; Finisar sold out of 4-Gig optics last quarter and expects that by year's end, sales of 4-Gig optics will surpass 2-Gig optics sales. At about that time, 8-Gig should launch.
Special Offer: Shares of all-optical networking company Broadwing have tripled since October from $5 to $15. How much gas is left in the tank? What about Avanex? Click here for guidance in the Gilder Technology Report.
Online applications are also pushing 10-Gig Ethernet into LANs and MANs. Revenue from 10-Gig more than tripled over the year-ago quarter to $5 million, partly due to the newly acquired 10-Gig transceiver line from Big Bear Networks. This merely scratches the surface of the long-term opportunity: Ethernet ports in the last mile have been growing 20% to 30% annually, with 10-Gig still only a small fraction of that.
Two methods are used to transmit at 10-Gig. Serial transceivers use one 10-Gbps laser and one photodetector. Parallel transceivers use four 2.5-Gbps lasers and four photodetectors. Most of Finisar's work has gon
Charlie Burger, Gilder Technology Report 04.18.06, 6:00 AM ET
GREAT BARRINGTON, Mass. -
Since George Gilder added Finisar to the Gilder Technology Report "Telecom Technologies" list on Dec. 22, the stock has more than doubled. Is it still a good value?
Fiber optics are on fire, but so are some specialized semiconductor companies. Click here for three to buy now in the Gilder Technology Report.
The No. 2 optical components supplier behind JDS Uniphase (nasdaq: JDSU - news - people ), Finisar (nasdaq: FNSR - news - people ) generates 90% of sales from optical transceivers. The company ranks first in SANs (storage area networks), second in LANs (local area networks) and has a growing MANs (metro area networks) business. Cisco Systems (nasdaq: CSCO - news - people ) is Finisar's largest customer, and Finisar in turn is the largest optical supplier to Cisco. April should bring the 11th consecutive sequential revenue rise, hoisting sales for fiscal year 2006 to $362 million, up 29% from 2005 and double the level in 2004.
Online applications are sending the SAN market into orbit. Brocade (nasdaq: BRCD - news - people ), EMC (nyse: EMC - news - people ) and QLogic (nasdaq: QLGC - news - people ) plan to double the size of their installations over the next year and continue to add at a compound annual rate of 70% thereafter. The uptake of 4 Gbps networks accelerated unexpectedly the last few months; Finisar sold out of 4-Gig optics last quarter and expects that by year's end, sales of 4-Gig optics will surpass 2-Gig optics sales. At about that time, 8-Gig should launch.
Special Offer: Shares of all-optical networking company Broadwing have tripled since October from $5 to $15. How much gas is left in the tank? What about Avanex? Click here for guidance in the Gilder Technology Report.
Online applications are also pushing 10-Gig Ethernet into LANs and MANs. Revenue from 10-Gig more than tripled over the year-ago quarter to $5 million, partly due to the newly acquired 10-Gig transceiver line from Big Bear Networks. This merely scratches the surface of the long-term opportunity: Ethernet ports in the last mile have been growing 20% to 30% annually, with 10-Gig still only a small fraction of that.
Two methods are used to transmit at 10-Gig. Serial transceivers use one 10-Gbps laser and one photodetector. Parallel transceivers use four 2.5-Gbps lasers and four photodetectors. Most of Finisar's work has gon
May 6, 2006 9:42 AM
Justin Dolan :
So does anyone know why FNSR made the big move on Thursday above 5 and then
stayed there? I've searched all over and can't seem to find out why, so
have just surmised that money in JDSU and the others has been moved into
the best of the breed, FNSR. Thoughts?
May 9, 2006 1:47 AM
Justin :
The move was due to trading volume being 127% above its 50 DMA. I thought
FNSR was breaking out of its base but apparently it is still consolidating,
probably shaking weak investors.
I've been following FNSR closely the last couple weeks. I personally feel it's a good stock, the company has constantly improving financials and solid management. Analysts place EPS estimates for 2007 at a 433% gain.
I certainly think FNSR has room to grow, but I wish I knew a little bit more about this sector. Anyone got a feel for what kind of investor interest FNSR has or might have?
I've been following FNSR closely the last couple weeks. I personally feel it's a good stock, the company has constantly improving financials and solid management. Analysts place EPS estimates for 2007 at a 433% gain.
I certainly think FNSR has room to grow, but I wish I knew a little bit more about this sector. Anyone got a feel for what kind of investor interest FNSR has or might have?
May 9, 2006 2:06 AM
Justin :
I also forgot to mention that trading volume above 50% normally means big
money is moving in.
May 9, 2006 8:14 PM
Justin Dolan :
Do either of you have any concern with the large amount of the stock
Levinson, a director and the founder of the company, has been dumping
lately? I'm a beginning investor, so forgive any naive questions. But I'm
unsure of when the selling is a cause of concern and when it is not.
On another note, I'm curious if CSCO conference call would illuminate the FNSR picture more, given that CSCO is FNSR's biggest customer.
On another note, I'm curious if CSCO conference call would illuminate the FNSR picture more, given that CSCO is FNSR's biggest customer.
May 9, 2006 11:47 PM
Justin :
Insider trading shouldn't be a huge cause for concern. I've read you
shouldn't use insider trading as a screen for a buy or sell indication
because there is too many variables at play.
Remember, most of those on the board of directors in a company (especially the CEO) has a lot of their personal wealth and savings tied up in the company stock (who else wants to see there company succeed more than them?) And frequently they have costs that their salaries can't pay for, so they will sell some shares. Plus they want to get rich too, so they'll sell some shares, especially if there stock is doing well. In fact you might see 10 times more insider selling than buying if a stock is doing well.
Only when you see all the insiders dumping huge amounts of share simultaneously should you investigate further. Especially if all that selling is coupled with bad financial news, IE; company taking huge cashflow losses or going bankrupt.
Remember, most of those on the board of directors in a company (especially the CEO) has a lot of their personal wealth and savings tied up in the company stock (who else wants to see there company succeed more than them?) And frequently they have costs that their salaries can't pay for, so they will sell some shares. Plus they want to get rich too, so they'll sell some shares, especially if there stock is doing well. In fact you might see 10 times more insider selling than buying if a stock is doing well.
Only when you see all the insiders dumping huge amounts of share simultaneously should you investigate further. Especially if all that selling is coupled with bad financial news, IE; company taking huge cashflow losses or going bankrupt.
May 10, 2006 12:30 AM
Justin :
I appreciate the warm welcome and thanks for the info. I've been investing
on and off in the past but just recently started seriously, so I wouldn't
exactly call myself a seasoned veteran, I'm still learning :)
Yea, I was posting over at motley fool, but the discussion board for FNSR is kinda dead, not to much activity. So I was wondering whether or not investors had lost interest in the company. Which didn't make sense because I looked closley at all their financials and they have all the indications of a winner. I can see from here though that it's certainly being talked about.
The internet is better than a financial advisor when it comes to investing IMO. For practically free you can talk to all types of investors and get educated opinions on every sector. It can't be beat . . . I'm just ridin the wave :) I'll post more of what I've found out about FNSR.
Impressive Bio BTW. I have the same exact goal that you have. Living off stock returns.I want to put money in high yeilding dividend stocks. I want to own enough shares to where I can live off dividends in the future. I heard REITS give killer returns . . you can beat the market by 30% investing in those bad boys.
Yea, I was posting over at motley fool, but the discussion board for FNSR is kinda dead, not to much activity. So I was wondering whether or not investors had lost interest in the company. Which didn't make sense because I looked closley at all their financials and they have all the indications of a winner. I can see from here though that it's certainly being talked about.
The internet is better than a financial advisor when it comes to investing IMO. For practically free you can talk to all types of investors and get educated opinions on every sector. It can't be beat . . . I'm just ridin the wave :) I'll post more of what I've found out about FNSR.
Impressive Bio BTW. I have the same exact goal that you have. Living off stock returns.I want to put money in high yeilding dividend stocks. I want to own enough shares to where I can live off dividends in the future. I heard REITS give killer returns . . you can beat the market by 30% investing in those bad boys.
May 10, 2006 10:45 PM
Justin :
The flat base that FNSR has entered certainly makes it attractive. It's
definetly in a correction period.
As a rule of thumb, you don't want to see a stock fluctuate over or under 12% in a flat base. The intraday price high on Thursday May, 4 was 5.44 which is 14.8% above it's basing start price of 4.74. But as of now it still seems to be in it's consolidation phase. The price jump on Thursday could've been institutional investors simply testing the waters to see how much momentum this stock has.
The good thing is that FNSR is in a proper flat base because the uptrend that preceeded it was more than 30% in which it climbed steadily in price from September of last year to March of this year. In actuality, it made a 40% increase in price over that time frame.
Furthermore, a stock should move horizontaly in a flat base for at least 5 weeks, in wich FNSR has. It started it's horizontal movement on 6 march, nearly ten weeks ago. Now according to IBD a majority of stocks that followed this pattern broke out of the base on an uptrend when the correction period was over, and the winningest stocks went on to form 3 and 4 bases after that even, once again followed by an uptrend each time.
I'm using this information coupled with what I see in their finacials to try an make an educated prediction. I think FNSR is going to continue on this trend until next month June when the company releases 4th quarter financials. We all know that analysts race to see if companies where in line with their projections especially when it comes to EPS. But what makes FNSR different during this time is that this past quarter is the first quarter in atleast the last 5 where they have netted a positive EPS. So this next quarter is critical that they meet EPS estimates, if they do, I can't see why they wouldn't start on a strong uptrend.
If couple that with the base that they are in you can practically feel that institution investors are just waitin for that day in June. Given all the information I've read from here along with my own DD, if finisar pulls it off this fiscal year end, the sky's the limit. Your thoughts?
Mac
As a rule of thumb, you don't want to see a stock fluctuate over or under 12% in a flat base. The intraday price high on Thursday May, 4 was 5.44 which is 14.8% above it's basing start price of 4.74. But as of now it still seems to be in it's consolidation phase. The price jump on Thursday could've been institutional investors simply testing the waters to see how much momentum this stock has.
The good thing is that FNSR is in a proper flat base because the uptrend that preceeded it was more than 30% in which it climbed steadily in price from September of last year to March of this year. In actuality, it made a 40% increase in price over that time frame.
Furthermore, a stock should move horizontaly in a flat base for at least 5 weeks, in wich FNSR has. It started it's horizontal movement on 6 march, nearly ten weeks ago. Now according to IBD a majority of stocks that followed this pattern broke out of the base on an uptrend when the correction period was over, and the winningest stocks went on to form 3 and 4 bases after that even, once again followed by an uptrend each time.
I'm using this information coupled with what I see in their finacials to try an make an educated prediction. I think FNSR is going to continue on this trend until next month June when the company releases 4th quarter financials. We all know that analysts race to see if companies where in line with their projections especially when it comes to EPS. But what makes FNSR different during this time is that this past quarter is the first quarter in atleast the last 5 where they have netted a positive EPS. So this next quarter is critical that they meet EPS estimates, if they do, I can't see why they wouldn't start on a strong uptrend.
If couple that with the base that they are in you can practically feel that institution investors are just waitin for that day in June. Given all the information I've read from here along with my own DD, if finisar pulls it off this fiscal year end, the sky's the limit. Your thoughts?
Mac
Jun 7, 2006 6:44 PM
Tim Trainor :
Made a nice little buy in the AH today. The report looked OK enough to me,
and I was buying back shares I sold @ 5.10.
Jun 8, 2006 12:20 AM
Justin :
FNSR is "a good comnpany in a bad neighborhood." 50% of a stocks
value is tied up with the sector it's associated with. Right now Tech is
out of favor, other tech companies with spectacular financial's aren't
doing anything either. This is because investors are worried about
inflation and Fed rate hikes, so the are pulling out of riskier stocks for
the time being.
I think as soon as we get through this cycle FNSR will move. The one constant in investing is when sales and earnings growth rise share price is soon to follow.
Some good news for the near term is that those that are short FNSR will be looking to buy back shares in light of this 4th quarter report, just check out this article: http://www.investors.com/breakingnews.asp?journalid=38862459
I think as soon as we get through this cycle FNSR will move. The one constant in investing is when sales and earnings growth rise share price is soon to follow.
Some good news for the near term is that those that are short FNSR will be looking to buy back shares in light of this 4th quarter report, just check out this article: http://www.investors.com/breakingnews.asp?journalid=38862459
Jun 10, 2006 5:11 AM
Steve Madigan :
I think it is amazing how a trend line can be so powerful. When FNSR was
rallying from 11/05 to 3/06 it came right up and hit the Bearish resistance
line at 5, then it hit its head against 5 again in 6/06 to find that it was
to much to handle and started to falter again. That trend line was in
effect from 1/02. Now FNSR is setting up for a shakeout pattern. Usually
these patterns are good ones to play when the market is on offense, but we
are not on offense right now. The defensive team is on the field, so not
sure how this pattern is going to play out.
If you wanted to play it you would buy on the 3 box reversal back to 4 and use the previous low as your stop out point which would be 3 right now. Now if it continues to make new lows the numbers above will all change. So just so we understand each other, the numbers above are if 3.25 is as low as it goes. The nice part about this pattern is that you have a very tight stop. Say for example it reverses back to 4 which will give you the x's again and then reverses back into o's and hits 3 that aborts the pattern. But again, these work best in offensive markets better than in defensive markets.
Right now relative strength is negative which is saying that FNSR is going to under perform the market near term. This just occurred on 6/8. Could we see the lower end of the trading bands at 2.75, that is certainly possible right now with RS negative and the defensive team on the field. The bearish price objective is 1.25. It would have to really tank to get there. Bullish support line is at 1.75.
Hopefully profits were being taken on the way up.
<pre><b>
16.5 | | | | | | | ||| | | | | | | | | | | | ||| | ||| | | | ||||| | | | | | | | | | 16.5
16.0 | | | | | | | ||| | | | | | | | | | | | ||| | ||| | | | ||||| | | | | | | | | | 16.0|
15.5 | | | | | | | ||| | | | | | | | | | | | ||| | ||| | | | ||||| | | | | | | | | | 15.5|
15.0 | | | | | | | ||| |•| | | | | | | | | | ||| | ||| | | | ||||| | | | | | | | | | 15.0|
14.5 | | | | | | | |X| |X|•| | | | | | | | | ||| | ||| | | | ||||| | | | | | | | | | 14.5|
14.0 | | | | | | | |X|O|X|O|•| | | | | | | | ||| | ||| | | | ||||| | | | | | | | | | 14.0|
13.5 | |X| |X| | | |X|O|X|O| |•| | | | | | | ||| | ||| | | | ||||| | | | | | | | | | 13.5|
13.0 | |X|O|X|O|X| |X|O| |O|X| |•| | | | | | ||| | ||| | | | ||||| | | | | | | | | | 13.0|
12.5 •| |X|O|X|O|X|O|X| | |O|X|O| |•| | | | | ||| | ||| | | | ||||| | | | | | | | | | 12.5|
12.0 |•|
If you wanted to play it you would buy on the 3 box reversal back to 4 and use the previous low as your stop out point which would be 3 right now. Now if it continues to make new lows the numbers above will all change. So just so we understand each other, the numbers above are if 3.25 is as low as it goes. The nice part about this pattern is that you have a very tight stop. Say for example it reverses back to 4 which will give you the x's again and then reverses back into o's and hits 3 that aborts the pattern. But again, these work best in offensive markets better than in defensive markets.
Right now relative strength is negative which is saying that FNSR is going to under perform the market near term. This just occurred on 6/8. Could we see the lower end of the trading bands at 2.75, that is certainly possible right now with RS negative and the defensive team on the field. The bearish price objective is 1.25. It would have to really tank to get there. Bullish support line is at 1.75.
Hopefully profits were being taken on the way up.
<pre><b>
16.5 | | | | | | | ||| | | | | | | | | | | | ||| | ||| | | | ||||| | | | | | | | | | 16.5
16.0 | | | | | | | ||| | | | | | | | | | | | ||| | ||| | | | ||||| | | | | | | | | | 16.0|
15.5 | | | | | | | ||| | | | | | | | | | | | ||| | ||| | | | ||||| | | | | | | | | | 15.5|
15.0 | | | | | | | ||| |•| | | | | | | | | | ||| | ||| | | | ||||| | | | | | | | | | 15.0|
14.5 | | | | | | | |X| |X|•| | | | | | | | | ||| | ||| | | | ||||| | | | | | | | | | 14.5|
14.0 | | | | | | | |X|O|X|O|•| | | | | | | | ||| | ||| | | | ||||| | | | | | | | | | 14.0|
13.5 | |X| |X| | | |X|O|X|O| |•| | | | | | | ||| | ||| | | | ||||| | | | | | | | | | 13.5|
13.0 | |X|O|X|O|X| |X|O| |O|X| |•| | | | | | ||| | ||| | | | ||||| | | | | | | | | | 13.0|
12.5 •| |X|O|X|O|X|O|X| | |O|X|O| |•| | | | | ||| | ||| | | | ||||| | | | | | | | | | 12.5|
12.0 |•|
Jul 9, 2006 5:38 PM
tomkk :
Kirk -- Great news. As you know I have been following your FNSR
recommendations -- and making a good profit on them (Thank You!) I believe
that swing trading is not something that you normally recommend. But this
FNSR gap just calls for it :). I will be in tomorrow from 3.22 to 3.35.
Planning to exit around 4.5. If 4.5 does not work, I will hold the shares
for longer time.
Thanks for your steady guidance.
Thanks for your steady guidance.
Aug 30, 2006 12:11 PM
Tim Trainor :
Got a buy @ 3.11!! (Also $4.10, but who wants to do full disclosure,
right? I had taken profits@ 4.95, and figured they'd fallen far enough to
make it worthwhile.} I think I'll sell my 4.10 shares, and let my 3.11's
ride, as I bought twice as many @ 4.11.
What a great trading stock!
What a great trading stock!
Aug 30, 2006 5:58 PM
James Joseph Kenney :
I couldn't agree with you more about FNSR being a great trading stock. I
first bought 2000sh at $1.90 back in June 2004. I now own 12,000 shares
with an average cost basis of only $0.68 (but my cheapest purchase price
was $1 even). So I am sitting on a paper profit at today's close of more
than $40K. Hopefully it'll get back over $5. By then I plan to have 10K
shares and be on "house money" with a few thousand in the bank.
Now that is a great trading stock!!!!!!!
Aug 30, 2006 6:47 PM
Tim Trainor :
My low buy was 1.05, as well (I think Kirk had a lot to do with that buy),
but I had done a fair amount of trading by then(since it was first pointed
out on one of the boards here, probably in 2003. I took profits all the way
up, and I plan to do it again if we're lucky enough to see it climb to new
highs. I was down to 1500 shares when it got to $5.00, but now am back up
to 15,500 shares.
Aug 30, 2006 8:20 PM
James Joseph Kenney :
Wow - you really sold it off a lot more aggressively than I did. Even when
I sold at $5.05 on 3/14/06 I still had 9K shares of FNSR and those were on
"house money". Of course, I had as many as 20K shares back in
August through November of 2005. I'd really like the 3000sh I sold on
11/21/05 for $1.84 back and the 5500sh I sold between $2.16 and $2.95 last
winter too, but I imagine not as badly as those who sold me the 8000sh
between $1 and $1.05 back in the Summer of '05 would like to undo those
trades!
Aug 31, 2006 12:33 PM
William Duffy :
.
I found this on the Yahoo Finance message board. It gives an interesting perspective on FNSR:
To answer your question about the relative value of BKHM and FNSR, one of the reasons the PPS is close is that BKHM has no long-term debt, while FNSR has about $230M in long-term debt. As a result, BKHM has net tangible assets of about $2.00 per share, while FNSR has net tangible assets of about $0.11 per share. In other words, if both companies closed their doors and sold off their assets, in theory BKHM shareholders would receive about $2.00 in cash, while FNSR shareholders would only receive $0.11 since the debt has to be paid back first.
Apart from the value of assets, a stock's price is based in theory on an estimate of the present value of future earnings. Right now, BKHM says that they have a plan to reach profitability at some unspecified time in the future. Apparently, the market is willing to give them the benefit of the doubt based on the sheer volume of their sales, and the present value of potential future earnings is being marked at about $1.25 per share.
In contrast, FNSR is already profitable, and is growing. The market currently is valuing FNSR's present value of future earnings at about $3.65 per share, after you subtract the hard value of tangible assets. Considering the fact that analysts estimate FNSR's earnings this year at $0.15 EPS and next year at $0.22, it appears to be a P/E ratio of 24 for this year and 16 for next year. Some might say that's fair value for a stock, while others feel it's somewhat undervalued. The PPS has been brought low this summer due to cumulative shorting of about 25M shares, despite the fact that institutions picked up an additional 20M shares last quarter.
However, there are a number of issues that may change FNSR's financial picture in the near future. First of all, the EPS estimates are based on the assumption that the convertible debt will be converted into equity, which will dilute the stock by about 20%. However, that assumption also means that the net tangible assets of FNSR will increase to about $0.72 per share. Using this assumption, the P/E ratio after subtracting net tangible assets becomes 20 for this year and 13.6 for next year.
Second of all, FNSR recently won a patent-infringement lawsuit against DirecTV. Damages were about $120M including back interest, plus estimated annual royalty payments of about $0.07 per share. If the judgment is upheld on appeal, suddenly net tangible as
I found this on the Yahoo Finance message board. It gives an interesting perspective on FNSR:
To answer your question about the relative value of BKHM and FNSR, one of the reasons the PPS is close is that BKHM has no long-term debt, while FNSR has about $230M in long-term debt. As a result, BKHM has net tangible assets of about $2.00 per share, while FNSR has net tangible assets of about $0.11 per share. In other words, if both companies closed their doors and sold off their assets, in theory BKHM shareholders would receive about $2.00 in cash, while FNSR shareholders would only receive $0.11 since the debt has to be paid back first.
Apart from the value of assets, a stock's price is based in theory on an estimate of the present value of future earnings. Right now, BKHM says that they have a plan to reach profitability at some unspecified time in the future. Apparently, the market is willing to give them the benefit of the doubt based on the sheer volume of their sales, and the present value of potential future earnings is being marked at about $1.25 per share.
In contrast, FNSR is already profitable, and is growing. The market currently is valuing FNSR's present value of future earnings at about $3.65 per share, after you subtract the hard value of tangible assets. Considering the fact that analysts estimate FNSR's earnings this year at $0.15 EPS and next year at $0.22, it appears to be a P/E ratio of 24 for this year and 16 for next year. Some might say that's fair value for a stock, while others feel it's somewhat undervalued. The PPS has been brought low this summer due to cumulative shorting of about 25M shares, despite the fact that institutions picked up an additional 20M shares last quarter.
However, there are a number of issues that may change FNSR's financial picture in the near future. First of all, the EPS estimates are based on the assumption that the convertible debt will be converted into equity, which will dilute the stock by about 20%. However, that assumption also means that the net tangible assets of FNSR will increase to about $0.72 per share. Using this assumption, the P/E ratio after subtracting net tangible assets becomes 20 for this year and 13.6 for next year.
Second of all, FNSR recently won a patent-infringement lawsuit against DirecTV. Damages were about $120M including back interest, plus estimated annual royalty payments of about $0.07 per share. If the judgment is upheld on appeal, suddenly net tangible as
Aug 31, 2006 1:03 PM
tomkk :
Kirk - I did make it in at 3.22 as planned. But since I was vacationing
out of the country, I put a stop loss on 1/2 of the trade. That was a
mistake! It triggered a sell at 3.15 a few days later. Fortunately I kept
the other 1/2 which I will sell when we are close to the next resistance
level, probably around 4.30. Altogether, I am very happy with this trade,
even if it could have been better. But the vacation in England was worth
it.
By the way - I am glad to see that this thread is picking up with nice from fellow investors like codfish, doctorj2, et al. -- Tom
By the way - I am glad to see that this thread is picking up with nice from fellow investors like codfish, doctorj2, et al. -- Tom
Sep 6, 2006 6:33 AM
Steve Madigan :
What happened to FNSR? Why the big down draft?
<b>Beartoes</b>
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Sep 6, 2006 6:53 AM
Steve Madigan :
Is it a buy now Kirk? Should we be backing the truck up?
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Sep 7, 2006 7:25 AM
Steve Madigan :
I didn't do anything. Just kind of waiting and watching. It was working a
shakeout pattern and still is, but it has now reversed to O's. So just
waiting.
Beartoes
Beartoes
Sep 8, 2006 6:39 AM
Steve Madigan :
Just an FYI. RS vs SPXEWI just went to O's. Not good. Should under
perform near term.
<b>Beartoes</b>
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Sep 13, 2006 6:35 PM
William Duffy :
.
This looks like CSCO might be a better investment than FNSR:
Cisco's Secret Franchise
SEPTEMBER 06, 2006
It's well known that Cisco Systems Inc. (Nasdaq: CSCO - message board) customers are just about forced to buy optics from Cisco, and at hefty markups. The practice is an annoyance to some customers -- and now a report suggests investors should start worrying about it, too.
Cisco's practice of reselling optical modules represented 25 percent of the company's operating income in fiscal 2006, according to Andrew Schmitt, principal of Nyquist Capital, in a report being issued today.
To put it another way: Cisco's pro forma earnings per share for fiscal 2006 totaled $1.12. The figure drops to 86 cents when you take out profits from modules, Schmitt claims.
The modules in question connect a linecard to an optical fiber, and they come in standard formats such as GBIC and SFP. Cisco buys these modules from vendors like Finisar Corp. (Nasdaq: FNSR - message board), then resells them to Cisco customers, charging a massive markup. Along the way, Cisco does almost nothing to the module beyond adding some identifying information (which is important -- more on that later).
Cisco doesn't consider optical module reselling to be a separate business unit. But Schmitt claims the practice generates some eye-popping revenues -- $2.5 billion in fiscal 2006, or 9 percent of Cisco's total, he believes.
Cisco officials wouldn't comment, noting they don't publicly disclose this level of detail for their operating results.
Schmitt isn't accusing Cisco of any chicanery here. "In a sense, there's nothing wrong," he says. "They have done an excellent job of taking their strong position in Ethernet and extracting value out of what is a commodity device."
But the margins on optics are so high -- up to 90 percent gross profit, Schmitt figures -- that they're padding the company's profit growth, he says. Investors looking at the raw numbers would think Cisco's profits are increasing because of technology when, in fact, a good chunk of the increase comes from the optics markup.
It's analogous to the situation at Lucent Technologies Inc. (NYSE: LU - message board), where profits are sometimes propped up by gains from the company's pension fund. (See Notter Nixes Lucent.) In both cases, something outside the company's normal business is boosting income -- and the X factor isn't necessarily sustainable.
"This has really been an engine
This looks like CSCO might be a better investment than FNSR:
Cisco's Secret Franchise
SEPTEMBER 06, 2006
It's well known that Cisco Systems Inc. (Nasdaq: CSCO - message board) customers are just about forced to buy optics from Cisco, and at hefty markups. The practice is an annoyance to some customers -- and now a report suggests investors should start worrying about it, too.
Cisco's practice of reselling optical modules represented 25 percent of the company's operating income in fiscal 2006, according to Andrew Schmitt, principal of Nyquist Capital, in a report being issued today.
To put it another way: Cisco's pro forma earnings per share for fiscal 2006 totaled $1.12. The figure drops to 86 cents when you take out profits from modules, Schmitt claims.
The modules in question connect a linecard to an optical fiber, and they come in standard formats such as GBIC and SFP. Cisco buys these modules from vendors like Finisar Corp. (Nasdaq: FNSR - message board), then resells them to Cisco customers, charging a massive markup. Along the way, Cisco does almost nothing to the module beyond adding some identifying information (which is important -- more on that later).
Cisco doesn't consider optical module reselling to be a separate business unit. But Schmitt claims the practice generates some eye-popping revenues -- $2.5 billion in fiscal 2006, or 9 percent of Cisco's total, he believes.
Cisco officials wouldn't comment, noting they don't publicly disclose this level of detail for their operating results.
Schmitt isn't accusing Cisco of any chicanery here. "In a sense, there's nothing wrong," he says. "They have done an excellent job of taking their strong position in Ethernet and extracting value out of what is a commodity device."
But the margins on optics are so high -- up to 90 percent gross profit, Schmitt figures -- that they're padding the company's profit growth, he says. Investors looking at the raw numbers would think Cisco's profits are increasing because of technology when, in fact, a good chunk of the increase comes from the optics markup.
It's analogous to the situation at Lucent Technologies Inc. (NYSE: LU - message board), where profits are sometimes propped up by gains from the company's pension fund. (See Notter Nixes Lucent.) In both cases, something outside the company's normal business is boosting income -- and the X factor isn't necessarily sustainable.
"This has really been an engine
Sep 22, 2006 1:47 PM
Single Engle :
Looking for opinions regarding FNSR's reverse split.
Sep 22, 2006 2:12 PM
Steve Thompson :
.
Maybe they are trying to keep up with JDSU? :)
Maybe they are trying to keep up with JDSU? :)
Sep 22, 2006 2:13 PM
hickfish :
I am not certain, but am eager to hear of any opinions as well.
Sep 22, 2006 3:44 PM
PEIC :
Small Business and Technology Focus
JDSU Reverse Split
By Scott Moritz
Senior Writer
9/21/2006 4:38 PM EDT
URL: http://www.thestreet.com/smallbusinesstech/smallbusinesstech/10310499.html< br />
JDSU (JDSU) calls it reverse-split time.
The San Jose, Calif., optical parts maker says holders will get one share for every eight shares they hold on Oct. 16. The move comes just 21 months after the company's board approved the so-called share consolidation.
The reverse split will cut the number of shares outstanding to a mere 211 million from 1.7 billion today.
JDSU says the reduction is intended to "enhance investors' visibility into the company's profitability on a per share basis." The fewer shares, and subsequent higher stock price, may broaden JDSU's appeal to investors and reduce administrative costs, the company says.
Shares of JDSU have fallen by half since April as investors fled many of the optical networking component stocks like rivals Bookham (BKHM) and Avanex (AVNX) .
JDSU rose a dime to $2.25 in after-hours trading Thursday.
JDSU Reverse Split
By Scott Moritz
Senior Writer
9/21/2006 4:38 PM EDT
URL: http://www.thestreet.com/smallbusinesstech/smallbusinesstech/10310499.html< br />
JDSU (JDSU) calls it reverse-split time.
The San Jose, Calif., optical parts maker says holders will get one share for every eight shares they hold on Oct. 16. The move comes just 21 months after the company's board approved the so-called share consolidation.
The reverse split will cut the number of shares outstanding to a mere 211 million from 1.7 billion today.
JDSU says the reduction is intended to "enhance investors' visibility into the company's profitability on a per share basis." The fewer shares, and subsequent higher stock price, may broaden JDSU's appeal to investors and reduce administrative costs, the company says.
Shares of JDSU have fallen by half since April as investors fled many of the optical networking component stocks like rivals Bookham (BKHM) and Avanex (AVNX) .
JDSU rose a dime to $2.25 in after-hours trading Thursday.
Sep 25, 2006 6:48 AM
Steve Thompson :
.
<b>Finisar Unveils SD/SDIO Analyzer to Support Next-Generation Consumer Electronics Products</b>
Monday September 25, 5:00 am ET
http://biz.yahoo.com/iw/060925/0165952.html?printer=1
SUNNYVALE, CA--(MARKET WIRE)--Sep 25, 2006 -- Finisar Corporation (NASDAQ:FNSR - News), a technology leader for fiber optic components and network test and monitoring systems, today introduced Bus Doctor(TM) 4.2, the only protocol analyzer in the industry capable of supporting a broad array of consumer electronics protocols, including Secure Digital/Secure Digital Input/Output (SD/SDIO). SD/SDIO standards are used to provide storage and input/output (I/O) capabilities for cell phones, PDAs and other consumer electronic devices. Bus Doctor 4.2 allows SD/SDIO product designers and manufacturers to rapidly analyze and diagnose storage needs within a single platform. With its wide range of supported protocols, Bus Doctor eliminates the need for multiple testing tools so that consumer products can be efficiently delivered to market on-time and under budget. Finisar will be demonstrating Bus Doctor 4.2 in Booth #538 at the Intel Developer Forum taking place September 26-28 at the Moscone Center in San Francisco.
"The Bus Doctor CompactFlash(TM) Protocol Analyzer has been an important tool allowing Canon engineers to design and validate products for this memory card standard," said Shigeto Kanda, general manager, Canon and chairman of the board of the CompactFlash Association (CFA). "With the introduction of the SD/SDIO protocol analyzer from Finisar, the Bus Doctor now supports many of the leading memory card formats used in consumer electronics devices today, including CompactFlash and MultiMediaCard."
"The Bus Doctor is an incredibly versatile solution that has been crucial in allowing us to stay ahead of the development curve for storage consumer products," said J.S. Shim, principal engineer, Samsung. "The rapid growth in popularity of personal electronics devices is fueling the need for analyzer tools that can support a wide variety of standards. Bus Doctor's integrated platform allows for the analysis and troubleshooting of various different protocols simultaneously and has greatly streamlined Samsung's test process."
Bus Doctor 4.2 features an easy-to-use and robust graphical user interface which helps identify and resolve interoperability issues between various SD/SDIO hosts and devices. It also features a hardware search capability enabling storage manu
<b>Finisar Unveils SD/SDIO Analyzer to Support Next-Generation Consumer Electronics Products</b>
Monday September 25, 5:00 am ET
http://biz.yahoo.com/iw/060925/0165952.html?printer=1
SUNNYVALE, CA--(MARKET WIRE)--Sep 25, 2006 -- Finisar Corporation (NASDAQ:FNSR - News), a technology leader for fiber optic components and network test and monitoring systems, today introduced Bus Doctor(TM) 4.2, the only protocol analyzer in the industry capable of supporting a broad array of consumer electronics protocols, including Secure Digital/Secure Digital Input/Output (SD/SDIO). SD/SDIO standards are used to provide storage and input/output (I/O) capabilities for cell phones, PDAs and other consumer electronic devices. Bus Doctor 4.2 allows SD/SDIO product designers and manufacturers to rapidly analyze and diagnose storage needs within a single platform. With its wide range of supported protocols, Bus Doctor eliminates the need for multiple testing tools so that consumer products can be efficiently delivered to market on-time and under budget. Finisar will be demonstrating Bus Doctor 4.2 in Booth #538 at the Intel Developer Forum taking place September 26-28 at the Moscone Center in San Francisco.
"The Bus Doctor CompactFlash(TM) Protocol Analyzer has been an important tool allowing Canon engineers to design and validate products for this memory card standard," said Shigeto Kanda, general manager, Canon and chairman of the board of the CompactFlash Association (CFA). "With the introduction of the SD/SDIO protocol analyzer from Finisar, the Bus Doctor now supports many of the leading memory card formats used in consumer electronics devices today, including CompactFlash and MultiMediaCard."
"The Bus Doctor is an incredibly versatile solution that has been crucial in allowing us to stay ahead of the development curve for storage consumer products," said J.S. Shim, principal engineer, Samsung. "The rapid growth in popularity of personal electronics devices is fueling the need for analyzer tools that can support a wide variety of standards. Bus Doctor's integrated platform allows for the analysis and troubleshooting of various different protocols simultaneously and has greatly streamlined Samsung's test process."
Bus Doctor 4.2 features an easy-to-use and robust graphical user interface which helps identify and resolve interoperability issues between various SD/SDIO hosts and devices. It also features a hardware search capability enabling storage manu
Sep 27, 2006 7:53 AM
Steve Madigan :
Come on over to the PnF board and see what I said about FNSR in June?
http://investment.suite101.com/discussion.cfm/1574/142-142
<b>Beartoes</b>
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http://investment.suite101.com/discussion.cfm/1574/142-142
<b>Beartoes</b>
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Oct 2, 2006 10:30 AM
Steve Madigan :
Come on over to PnF and see what the charts have to say.
If you would like me to look at something for you, just post it over at the PnF board and I will take a look for you. Thanks
http://investment.suite101.com/discussion.cfm/1574/154-154
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http://investment.suite101.com/discussion.cfm/1574/154-154
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Oct 9, 2006 8:01 PM
PEIC :
4 tiny tech stocks that may grow into stars
Picking small-cap tech companies to invest in isn't easy, but fund manager Kevin Landis says these four offer the right product, right place and right time.
FORTUNE Magazine
By Corey Hajim, FORTUNE reporter
October 9 2006: 3:57 PM EDT
(Fortune) -- Picking small-cap tech companies that will grow into the Apples (Charts) and Googles (Charts) of the future is kind of like looking for potential among a group of teenagers. It isn't easy to tell who's going to make it big.
But finding the kids who will grow up to be stars is part of Kevin Landis's job: As chief investment officer of Firsthand, a San Jose, Calif.-based mutual fund company, and manager of its Tech Innovators Fund, he invests in young companies poised to bring "breakthrough" products to market. "One of the ways we bring some value [to shareholders] is company discovery," he explains.
If you're interested in small-cap tech stocks, it's worth getting to know Landis's picks. His Technology Innovators Fund was launched in 1998 and since has returned on average more than 5% annually to investors, beating the averages for both the S&P 500 and the Nasdaq by almost two percentage points. In the past three years, the fund has returned almost 19% annually.
His four top picks below are companies that he says fit his investing strategy of right product, right place and right time.
Intevac, (IVAC) $17
The fund's largest holding, Intevac (Charts), makes the equipment that hard-disk-drive manufacturers use to create their disks. This equipment, called sputtering technology, applies layers of coating to disks that store information.
Until recently, disk manufacturers used horizontal layering of data (think one-story homes), but things started to get crowded. So, Intevac came up with a way for disks to store data vertically (think New York City) in what's called perpendicular recording. This method helps manufacturers keep up with demand for more memory in smaller disks at cheaper prices.
Intevac stock is up about 70% in the past year, but is still trading at a very appealing PE of 13 based on 2006 earnings, with $2 of cash per share on the balance sheet and no debt. In the second quarter of this year, sales and earnings doubled.
<b>
Finisar, (FNSR) $3
Finisar (Charts) sells fiber-optic components that transfer data in networks both long distance and locally, so that video, HDTV, VoIP, and other kinds of data can travel more quickly to anoth
Picking small-cap tech companies to invest in isn't easy, but fund manager Kevin Landis says these four offer the right product, right place and right time.
FORTUNE Magazine
By Corey Hajim, FORTUNE reporter
October 9 2006: 3:57 PM EDT
(Fortune) -- Picking small-cap tech companies that will grow into the Apples (Charts) and Googles (Charts) of the future is kind of like looking for potential among a group of teenagers. It isn't easy to tell who's going to make it big.
But finding the kids who will grow up to be stars is part of Kevin Landis's job: As chief investment officer of Firsthand, a San Jose, Calif.-based mutual fund company, and manager of its Tech Innovators Fund, he invests in young companies poised to bring "breakthrough" products to market. "One of the ways we bring some value [to shareholders] is company discovery," he explains.
If you're interested in small-cap tech stocks, it's worth getting to know Landis's picks. His Technology Innovators Fund was launched in 1998 and since has returned on average more than 5% annually to investors, beating the averages for both the S&P 500 and the Nasdaq by almost two percentage points. In the past three years, the fund has returned almost 19% annually.
His four top picks below are companies that he says fit his investing strategy of right product, right place and right time.
Intevac, (IVAC) $17
The fund's largest holding, Intevac (Charts), makes the equipment that hard-disk-drive manufacturers use to create their disks. This equipment, called sputtering technology, applies layers of coating to disks that store information.
Until recently, disk manufacturers used horizontal layering of data (think one-story homes), but things started to get crowded. So, Intevac came up with a way for disks to store data vertically (think New York City) in what's called perpendicular recording. This method helps manufacturers keep up with demand for more memory in smaller disks at cheaper prices.
Intevac stock is up about 70% in the past year, but is still trading at a very appealing PE of 13 based on 2006 earnings, with $2 of cash per share on the balance sheet and no debt. In the second quarter of this year, sales and earnings doubled.
<b>
Finisar, (FNSR) $3
Finisar (Charts) sells fiber-optic components that transfer data in networks both long distance and locally, so that video, HDTV, VoIP, and other kinds of data can travel more quickly to anoth
Oct 25, 2006 6:37 AM
PEIC :
Posted on Oct 25th, 2006 with stocks: ADCT, FNSR, JDSU, OPTM
American Express
Tiernan Ray (Barron's)
<b>Finisar (FNSR):</b> Finisar will likely report FY2Q 2007 (October 2006) results at the end of November. Overall, we expect the October quarter to be inline but are looking for much stronger revenue growth and margin expansion in the January quarter as the new Cisco 10G LAN program kicks in. Our FY2Q estimates of $110.7 million in revenues and EPS at $0.03 are inline with consensus. For January our published estimates of $115.5 million and $0.04 compare to consensus at $114.5 million and $0.04 and we see potential for even more revenue upside than we currently have in the model. For the October quarter our GMs estimate of 37.7% compares to the guidance range of 37.5%-38.5%. For the January quarter we are looking for significantly stronger GMs expansion to 38.8%.<b> Finisar remains our top pick in the Optical space and we recommend buying the stock aggressively below $4 per share.</b>
<b>JDS Uniphase:</b> JDSU guided to $312-$328 million in FY1Q sales. Our $326.3 million estimate is above consensus, which stands at $321.6. Our estimate is based on checks into the Optical business, which suggest another strong quarter of demand with continued capacity constraints, combined with management's comments around the reverse stock split that it would only implement the reverse if it saw continuing EBITDA improvement. In our view, the fact the company did the reverse implies that revenues should at least be within the top half of the guidance range. Our EPS forecast of $0.02 for the quarter compares to consensus at $0.01. <b>We note that if JDSU does produce an EPS profit for the quarter this will be the first EPS profit in five years at the company. </b>We expect the December quarter to mark the first positive operating margin in over 5 years at JDSU.<b> Given the pullback JDSU shares have seen in the past week following the reverse stock split we view the stock as attractively valued and recommend buying the shares aggressively in front of the FY1Q earnings report. </b>Consistent with our investment thesis on the stock, we are looking for an upturn in global carrier triple play spending in 1H CY 2007 to drive outperformance in financial results and expect more or less inline results before that in CY 2H 2006.
American Express
Tiernan Ray (Barron's)
<b>Finisar (FNSR):</b> Finisar will likely report FY2Q 2007 (October 2006) results at the end of November. Overall, we expect the October quarter to be inline but are looking for much stronger revenue growth and margin expansion in the January quarter as the new Cisco 10G LAN program kicks in. Our FY2Q estimates of $110.7 million in revenues and EPS at $0.03 are inline with consensus. For January our published estimates of $115.5 million and $0.04 compare to consensus at $114.5 million and $0.04 and we see potential for even more revenue upside than we currently have in the model. For the October quarter our GMs estimate of 37.7% compares to the guidance range of 37.5%-38.5%. For the January quarter we are looking for significantly stronger GMs expansion to 38.8%.<b> Finisar remains our top pick in the Optical space and we recommend buying the stock aggressively below $4 per share.</b>
<b>JDS Uniphase:</b> JDSU guided to $312-$328 million in FY1Q sales. Our $326.3 million estimate is above consensus, which stands at $321.6. Our estimate is based on checks into the Optical business, which suggest another strong quarter of demand with continued capacity constraints, combined with management's comments around the reverse stock split that it would only implement the reverse if it saw continuing EBITDA improvement. In our view, the fact the company did the reverse implies that revenues should at least be within the top half of the guidance range. Our EPS forecast of $0.02 for the quarter compares to consensus at $0.01. <b>We note that if JDSU does produce an EPS profit for the quarter this will be the first EPS profit in five years at the company. </b>We expect the December quarter to mark the first positive operating margin in over 5 years at JDSU.<b> Given the pullback JDSU shares have seen in the past week following the reverse stock split we view the stock as attractively valued and recommend buying the shares aggressively in front of the FY1Q earnings report. </b>Consistent with our investment thesis on the stock, we are looking for an upturn in global carrier triple play spending in 1H CY 2007 to drive outperformance in financial results and expect more or less inline results before that in CY 2H 2006.
Nov 30, 2006 3:43 PM
James Joseph Kenney :
I listen to part of the Finisar teleconference and they apparently have a
back-dating of options problem. Their CFO suddenly went on sick leave just
before the option scandal was made public. Hummmmm!
Jan 24, 2007 8:03 AM
PEIC :
Finisar Corp will demonstrate a 10Gbit/s Ethernet long-reach SFP+ optical
transceiver at Fiber Optics Expo 2007.
Finisar Corp will demonstrate a 10Gbit/s Ethernet long-reach (LR) SFP+ optical transceiver at Fiber Optics Expo (FOE) 2007, from 24th to 26th January 2007 in Tokyo, Japan. In addition, Finisar will demonstrate a new DWDM SFP (dense wavelength division multiplexing, small form factor pluggable) transceiver that supports L-Band channels, and the latest generation of its 40Gbit/s short reach transponder. All of these optical products are designed to provide greater flexibility and scalability for high-bandwidth datacomms and telecomms applications.
Finisar's 10Gbit/s Ethernet LR SFP+ is targeted at next-generation applications requiring the emerging SFP+ form factor.
Finisar's 10G SFP+ transceivers will enable high optical port density for Ethernet switches, core and edge routers, network interface cards and multiservice provisioning platforms (MSPPs).
Capable of transporting 10Gbit/s Ethernet traffic at distances of up to 10 km, these transceivers have a maximum power dissipation of less than one watt, and incorporate Finisar's patented digital diagnostics functionality.
Finisar's L-Band DWDM SFP is a pluggable optical transceiver that addresses challenges faced by carriers who have deployed networks with dispersion-shifted optical fibre, a common fibre-type used in Japan.
The L-Band is a specific grid of wavelengths standardised by the ITU (International Telecommunication Union) that enables DWDM operation over dispersion-shifted fibre.
The L-Band DWDM SFP offers multiprotocol performance meeting Sonet OC-48/STM-16 and gigabit Ethernet standards over link lengths of more than 80km, and is compatible with the DWDM SFP MSA (multisource agreement).
'As the leader in high-speed optical communications, we continually strive to create innovative optical products to support the ever-increasing bandwidth requirements of our largest customers', said Joe Young, Vice President and General Manager, Finisar's Optics Group.
'The demonstration of our 10Gbit/s SFP+ transceiver, in particular, is a testament to our commitment and determination to providing consistently high-performing, quality optics'.
Also on display will be the latest generation of Finisar's 40Gbit/s short reach 300-pin transponder, which provides very high-speed optical transport with low power dissipation and outstanding link performance.
Finisar will demonstr
Finisar Corp will demonstrate a 10Gbit/s Ethernet long-reach (LR) SFP+ optical transceiver at Fiber Optics Expo (FOE) 2007, from 24th to 26th January 2007 in Tokyo, Japan. In addition, Finisar will demonstrate a new DWDM SFP (dense wavelength division multiplexing, small form factor pluggable) transceiver that supports L-Band channels, and the latest generation of its 40Gbit/s short reach transponder. All of these optical products are designed to provide greater flexibility and scalability for high-bandwidth datacomms and telecomms applications.
Finisar's 10Gbit/s Ethernet LR SFP+ is targeted at next-generation applications requiring the emerging SFP+ form factor.
Finisar's 10G SFP+ transceivers will enable high optical port density for Ethernet switches, core and edge routers, network interface cards and multiservice provisioning platforms (MSPPs).
Capable of transporting 10Gbit/s Ethernet traffic at distances of up to 10 km, these transceivers have a maximum power dissipation of less than one watt, and incorporate Finisar's patented digital diagnostics functionality.
Finisar's L-Band DWDM SFP is a pluggable optical transceiver that addresses challenges faced by carriers who have deployed networks with dispersion-shifted optical fibre, a common fibre-type used in Japan.
The L-Band is a specific grid of wavelengths standardised by the ITU (International Telecommunication Union) that enables DWDM operation over dispersion-shifted fibre.
The L-Band DWDM SFP offers multiprotocol performance meeting Sonet OC-48/STM-16 and gigabit Ethernet standards over link lengths of more than 80km, and is compatible with the DWDM SFP MSA (multisource agreement).
'As the leader in high-speed optical communications, we continually strive to create innovative optical products to support the ever-increasing bandwidth requirements of our largest customers', said Joe Young, Vice President and General Manager, Finisar's Optics Group.
'The demonstration of our 10Gbit/s SFP+ transceiver, in particular, is a testament to our commitment and determination to providing consistently high-performing, quality optics'.
Also on display will be the latest generation of Finisar's 40Gbit/s short reach 300-pin transponder, which provides very high-speed optical transport with low power dissipation and outstanding link performance.
Finisar will demonstr
Jan 24, 2007 8:10 AM
PEIC :
Good post by stk2stk
FINISAR's 2007 IR PRESENTATION
23-Jan-07 12:31 pm
Well worth the read, if you haven't already looked at it!
Of particular interest for me is:
Growth Drivers Page 6
Total Transceiver/Transponder Mkt Page 10
10g-40g Opportunity Page 11
10g-40g Revenue Page 13
VSCEL Worldwide Leader Page 15
Vertical Integration Pages 16-17
Protocol Analysis Makt Page 20
Enterprise Mkt Opportunity Page 22
Qtrly/Annual Rev Growth Pages 24 and 25
http://investor.finisar.com/downloads/IRpresentation-01-07.pdf
FINISAR's 2007 IR PRESENTATION
23-Jan-07 12:31 pm
Well worth the read, if you haven't already looked at it!
Of particular interest for me is:
Growth Drivers Page 6
Total Transceiver/Transponder Mkt Page 10
10g-40g Opportunity Page 11
10g-40g Revenue Page 13
VSCEL Worldwide Leader Page 15
Vertical Integration Pages 16-17
Protocol Analysis Makt Page 20
Enterprise Mkt Opportunity Page 22
Qtrly/Annual Rev Growth Pages 24 and 25
http://investor.finisar.com/downloads/IRpresentation-01-07.pdf
Feb 5, 2007 10:10 PM
PEIC :
Expecting Selling Pressure On Finisar
Monday February 5, 9:49 am ET
.<b>
Notable Calls submits: Citigroup is somewhat cautious on Finisar (NasdaqGS: FNSR) saying that while the company remains their top stock pick for the next 12-month based on its strong potential upside to $5, they expect most of the stock appreciation in 2007 to occur in the second half of the year. </b>Firm's checks indicate the January earnings report will likely look a lot like the October report. That is, weaker than consensus revenues at the low end of the guidance and lower than consensus revenue guidance somewhat offset in earnings by strong GMs driven by high end products that are performing well. They believe the same issue that impacted October revenues is still a problem -- low end LAN/SAN (particularly SAN) inventory in the EMS channel.
.
Citi's thesis regarding strong CY2H 2007/FY1H 2008 financial and stock performance hinges on the ramp with Cisco in 10G modules for Cisco's enterprise switching line. They believe Finisar has already started to ship 10G SR (short reach standard for single-mode fiber) products to Cisco and is about one month away from full qualification on the much larger 10G LRM (long reach standard for multimode fiber) opportunity.
.<b>
Reiterates 12-month price target of $5 and Buy rating on FNSR but thinks in the next month or so the stock will likely pull back to $3 or slightly below. Frm would likely be aggressive buyers anywhere below $3.</b> At $3 the stock would be trading at just 11.5x CY 2008 EPS of $0.26.
.
Notablecalls: Expect to see some selling pressure on FNSR over the next couple of days.
.
http://biz.yahoo.com/seekingalpha/070205/26081_id.html?.v=1
Monday February 5, 9:49 am ET
.<b>
Notable Calls submits: Citigroup is somewhat cautious on Finisar (NasdaqGS: FNSR) saying that while the company remains their top stock pick for the next 12-month based on its strong potential upside to $5, they expect most of the stock appreciation in 2007 to occur in the second half of the year. </b>Firm's checks indicate the January earnings report will likely look a lot like the October report. That is, weaker than consensus revenues at the low end of the guidance and lower than consensus revenue guidance somewhat offset in earnings by strong GMs driven by high end products that are performing well. They believe the same issue that impacted October revenues is still a problem -- low end LAN/SAN (particularly SAN) inventory in the EMS channel.
.
Citi's thesis regarding strong CY2H 2007/FY1H 2008 financial and stock performance hinges on the ramp with Cisco in 10G modules for Cisco's enterprise switching line. They believe Finisar has already started to ship 10G SR (short reach standard for single-mode fiber) products to Cisco and is about one month away from full qualification on the much larger 10G LRM (long reach standard for multimode fiber) opportunity.
.<b>
Reiterates 12-month price target of $5 and Buy rating on FNSR but thinks in the next month or so the stock will likely pull back to $3 or slightly below. Frm would likely be aggressive buyers anywhere below $3.</b> At $3 the stock would be trading at just 11.5x CY 2008 EPS of $0.26.
.
Notablecalls: Expect to see some selling pressure on FNSR over the next couple of days.
.
http://biz.yahoo.com/seekingalpha/070205/26081_id.html?.v=1
Feb 11, 2007 7:07 AM
PEIC :
<b>Optical Module Vendor Opnext's IPO Looks Attractive -
Barron's</b>
Posted on Feb 10th, 2007
A Bet on Fiber's Future by Jack Willoughby
Summary: This week should see the IPO of optical module vendor Opnext (OPXT), a "rare pure-play on Japanese leadership in laser technology" and a beneficiary of rising bandwidth demand due to video and other multimedia Internet applications. Opnext was the 10 Gbps and 40 Gbps optical transceiver unit of Hitachi, which spun out Opnext in 2001 and transferred 670 patents to it. <b>Unlike many competitors, Opnext produces its own lasers. </b> Customers include Alcatel Lucent (ALA) and Cisco (CSCO). Competitors include Avago, Avanex (AVNX), Bookham (BKHM), Finisar (FNSR), Fujitsu, Intel (INTC), JDS Uniphase (JDSU), Mitsubishi, Optium (OPTM), and Sumitomo (according to the S-1; the Barron's article only mentions Optium). The market for 10 Gbps data modules will grow by a compound rate of 44% through 2009, according to market-research firm LightCounting. <b>If issued at the expected IPO price of $14, Opnext will trade at an enterprise value of 2.5x estimated 2007 revenue of $280 MM and a P/E of 18x 2008 estimated earnings, according to Renaissance Capital.</b> That's attractive versus the closest comparable, Optium, which trades at an enterprise value of 3.5x estimated 2007 revenue and 24x estimated 2008 earnings. Optium IPO'd October 26th 2006 at $17.50 and now trades at about $23. Hitachi and VC firm Clarity Partners are selling 40% of the 16.9 MM shares to be offered in the IPO. Goldman Sachs is the underwriter.
Posted on Feb 10th, 2007
A Bet on Fiber's Future by Jack Willoughby
Summary: This week should see the IPO of optical module vendor Opnext (OPXT), a "rare pure-play on Japanese leadership in laser technology" and a beneficiary of rising bandwidth demand due to video and other multimedia Internet applications. Opnext was the 10 Gbps and 40 Gbps optical transceiver unit of Hitachi, which spun out Opnext in 2001 and transferred 670 patents to it. <b>Unlike many competitors, Opnext produces its own lasers. </b> Customers include Alcatel Lucent (ALA) and Cisco (CSCO). Competitors include Avago, Avanex (AVNX), Bookham (BKHM), Finisar (FNSR), Fujitsu, Intel (INTC), JDS Uniphase (JDSU), Mitsubishi, Optium (OPTM), and Sumitomo (according to the S-1; the Barron's article only mentions Optium). The market for 10 Gbps data modules will grow by a compound rate of 44% through 2009, according to market-research firm LightCounting. <b>If issued at the expected IPO price of $14, Opnext will trade at an enterprise value of 2.5x estimated 2007 revenue of $280 MM and a P/E of 18x 2008 estimated earnings, according to Renaissance Capital.</b> That's attractive versus the closest comparable, Optium, which trades at an enterprise value of 3.5x estimated 2007 revenue and 24x estimated 2008 earnings. Optium IPO'd October 26th 2006 at $17.50 and now trades at about $23. Hitachi and VC firm Clarity Partners are selling 40% of the 16.9 MM shares to be offered in the IPO. Goldman Sachs is the underwriter.
Mar 11, 2007 6:07 PM
robroy :
Fiber Optics Market: Benefiting from the Online Video Trend
Sunday March 11, 2:27 pm ET
Sramana Mitra submits: A few nights ago I started publishing an interview with Jerry Rawls, Co-Founder and CEO of Finisar (NasdaqGS: FNSR), an fiber optics components leader that has gone through tremendous turmoil in its relatively long history.
ADVERTISEMENT
Remember, fiber optics was at one time a very hot market. Numerous startups got funded and massive amounts of venture money went down those proverbial optical tubes. The telcos managed to build up enormous over capacity in the system until the market finally collapsed.
Today, on the wings of upstart (and questionable) services like Google's (NasdaqGS: GOOG) YouTube, online video has become a major phenomenon. Braodband has, over the last 10 years, become ubiquitous, at least in the US. And it seems as though the fiber optics market is on its way back.
Companies like Finisar (NasdaqGS: FNSR), JDS Uniphase (NasdaqGS: JDSU), Opnext (NasdaqGS: OPXT), Avanex (NasdaqGM: AVNX), Bookham (NasdaqGM: BKHM), and Infinera are potential beneficiaries of this trend. For those investing in fiber optics today it may be worthwhile to follow the saga of Finisar, as they navigated their way out of the telecom meltdown, and has emerged as a strong player.
Of course, another very large beneficiary of the online video trend is Cisco (NasdaqGS: CSCO), which is doing everything it possibly can to boost the trend further. Acquiring social media startups has been one such recent tactic. Several of the above companies, most certainly Finisar, JDS, Opnext, are key suppliers to Cisco, and when Cisco wins the crumbs of those wins tend to travel downstream all the way to their factories in Asia!
http://biz.yahoo.com/seekingalpha/070311/29198_id.html?.v=1
Sunday March 11, 2:27 pm ET
Sramana Mitra submits: A few nights ago I started publishing an interview with Jerry Rawls, Co-Founder and CEO of Finisar (NasdaqGS: FNSR), an fiber optics components leader that has gone through tremendous turmoil in its relatively long history.
ADVERTISEMENT
Remember, fiber optics was at one time a very hot market. Numerous startups got funded and massive amounts of venture money went down those proverbial optical tubes. The telcos managed to build up enormous over capacity in the system until the market finally collapsed.
Today, on the wings of upstart (and questionable) services like Google's (NasdaqGS: GOOG) YouTube, online video has become a major phenomenon. Braodband has, over the last 10 years, become ubiquitous, at least in the US. And it seems as though the fiber optics market is on its way back.
Companies like Finisar (NasdaqGS: FNSR), JDS Uniphase (NasdaqGS: JDSU), Opnext (NasdaqGS: OPXT), Avanex (NasdaqGM: AVNX), Bookham (NasdaqGM: BKHM), and Infinera are potential beneficiaries of this trend. For those investing in fiber optics today it may be worthwhile to follow the saga of Finisar, as they navigated their way out of the telecom meltdown, and has emerged as a strong player.
Of course, another very large beneficiary of the online video trend is Cisco (NasdaqGS: CSCO), which is doing everything it possibly can to boost the trend further. Acquiring social media startups has been one such recent tactic. Several of the above companies, most certainly Finisar, JDS, Opnext, are key suppliers to Cisco, and when Cisco wins the crumbs of those wins tend to travel downstream all the way to their factories in Asia!
http://biz.yahoo.com/seekingalpha/070311/29198_id.html?.v=1
May 15, 2007 7:33 PM
Tim Trainor :
The boyz got 1500 of those 5 million shares from me @ 3.93. My cost on
those was 3.11 and it was 10 % of my position.
Nice day in Finnyland!
Nice day in Finnyland!
Jun 23, 2007 7:52 AM
PEIC :
Finisar CEO: FC Rising With 10G
Fibre Channel Fan
June 22, 2007
Finisar CEO Jerry Rawls loves Fibre Channel. Making optical components for use in Fibre Channel equipment helps keep over 3,000 Finisar employees busy all day, and Fibre Channel accounted for a hefty portion of his firm's $419 million revenues last year. (See Finisar Updates Expectations.)
"Fibre Channel demand overall will be strong for the next number of years," Rawls declared in an interview with Byte and Switch yesterday.
He dismisses speculation that iSCSI will cut into Fibre Channel sales. He's simply not concerned about iSCSI from a business standpoint. "In some sense, maybe I don't care," Rawls says. "There is a huge infrastructure around Fibre Channel SANs, a huge installed base of 2- and 4-Gbit/s Fibre Channel switches... I just got back from visiting a site with more than 100 switches in one SAN."
No names are provided, but Rawls says the site was part of a telecom company.
Rawls, who's been CEO of Finisar since 1989, says Fibre Channel use is expanding, not shrinking, as the need for storage increases. "Growth in storage is all around us. Big SAN operators are growing at extraordinary rates," he says. Drivers include the use of video, online access for customers of financial firms and other suppliers of services, and the need to retain records in compliance with regulations -- and get access to them instantly.
Three quarters ago, Rawls says, Finisar reached the crossover point, shipping more 4-Gbit/s Fibre Channel components than 2-Gbit/s. And faster gear is on the horizon, as Finisar customers, which include Cisco and other major suppliers, start planning new FC wares.
"In the last quarter, we have supplied several thousand 8-Gbit/s optics [components] for Fibre Channel suppliers, as well as analyzers to manufacturers." By mid-2008, he expects 8-Gbit/s FC products to roll out.
Finisar's background in Fibre Channel, which started with its provision of FC protocol analyzers in the 1990s, is also driving the shipment of NetWisdom Enterprise, a monitoring tool that incorporates monitors capable of tracking and analyzing storage traffic at data rates to 4 Gbit/s. (See Finisar Intros Enterprise Monitor.) Adopted by a number of customers, including Scotland's Halifax Bank, NetWisdom has become a pet project of Rawls.
"Storage can't fail, but there's been no monitoring available," he says. "It's fabric blindness -- no view into bottlenecks or latency."
Net
Fibre Channel Fan
June 22, 2007
Finisar CEO Jerry Rawls loves Fibre Channel. Making optical components for use in Fibre Channel equipment helps keep over 3,000 Finisar employees busy all day, and Fibre Channel accounted for a hefty portion of his firm's $419 million revenues last year. (See Finisar Updates Expectations.)
"Fibre Channel demand overall will be strong for the next number of years," Rawls declared in an interview with Byte and Switch yesterday.
He dismisses speculation that iSCSI will cut into Fibre Channel sales. He's simply not concerned about iSCSI from a business standpoint. "In some sense, maybe I don't care," Rawls says. "There is a huge infrastructure around Fibre Channel SANs, a huge installed base of 2- and 4-Gbit/s Fibre Channel switches... I just got back from visiting a site with more than 100 switches in one SAN."
No names are provided, but Rawls says the site was part of a telecom company.
Rawls, who's been CEO of Finisar since 1989, says Fibre Channel use is expanding, not shrinking, as the need for storage increases. "Growth in storage is all around us. Big SAN operators are growing at extraordinary rates," he says. Drivers include the use of video, online access for customers of financial firms and other suppliers of services, and the need to retain records in compliance with regulations -- and get access to them instantly.
Three quarters ago, Rawls says, Finisar reached the crossover point, shipping more 4-Gbit/s Fibre Channel components than 2-Gbit/s. And faster gear is on the horizon, as Finisar customers, which include Cisco and other major suppliers, start planning new FC wares.
"In the last quarter, we have supplied several thousand 8-Gbit/s optics [components] for Fibre Channel suppliers, as well as analyzers to manufacturers." By mid-2008, he expects 8-Gbit/s FC products to roll out.
Finisar's background in Fibre Channel, which started with its provision of FC protocol analyzers in the 1990s, is also driving the shipment of NetWisdom Enterprise, a monitoring tool that incorporates monitors capable of tracking and analyzing storage traffic at data rates to 4 Gbit/s. (See Finisar Intros Enterprise Monitor.) Adopted by a number of customers, including Scotland's Halifax Bank, NetWisdom has become a pet project of Rawls.
"Storage can't fail, but there's been no monitoring available," he says. "It's fabric blindness -- no view into bottlenecks or latency."
Net
Jul 11, 2007 6:41 PM
Steve Thompson :
.
By TIERNAN RAY
THE FIBER-OPTIC RESURGENCE THAT has paved the way for new public stocks in the last nine months is very real. It is also rather fragile, and as a result, some of those stocks are running far ahead of the rosiest outlook for their businesses.
Case in point, shares of recently public Infinera, which had a $182 million IPO on June 7. The stock popped 52% on the day and at a recent price of $24.99 is up 27% since the close of its first day of trading.
Seven-year-old Infinera, which started life as Zepton Networks, makes equipment used by phone companies to expand the bandwidth of their networks. It has a promising future, with sales soaring from $2.6 million to $50 million in the most recent quarter. And it's finally generating positive cash flow despite continued net losses.
But even with a dramatic rise in sales this year and next, it would be hard to justify the current 20 times multiple of price-to-trailing 12-month sales -- a valuation that seems to assume unreasonable growth in the fiber-optic market.
Sunnyvale, Calif.-based Infinera is one of four recent fiber-optic IPOs. Judging by the track records of those stocks, one might pick up Infinera at a cheaper price soon.
Opnext, Optium and IPG Photonics, three recent fiber-optic IPOs, have traded down as much as 25% from the closing price on their first day of trading.
Barron's Online have been big believers that after the collapse of optical networking stars like Sycamore Networks and Corvis in 2000, the fiber-optic market is on the rebound.
We wrote over a year-and-a-half ago that a pickup in fiber-optic equipment sales would benefit Ciena and laser maker Finisar. The stocks went on to double and triple, respectively. (See Weekday Trader, "Fiber Optics May Be Back from the Grave1," Sept. 13, 2005.)
Some of the most astute luminaries of networking say that fiber-optic deployments that cratered in the dot-com era's implosion are being now rebooted.
"The world didn't end in 2000," says Len Bosack, a co-founder of Cisco Systems who is running a fiber-optic equipment start-up called XKL. "Storage is continuing to get less expensive [and therefore multiplying rapidly], people are using computers more and more in their businesses, and all these things have driven an increase in bandwidth demand."
But it's a fragile recovery. The total market for optical equipment around the world was just $9.2 billion last year, less than a quarter the size of the market for ce
By TIERNAN RAY
THE FIBER-OPTIC RESURGENCE THAT has paved the way for new public stocks in the last nine months is very real. It is also rather fragile, and as a result, some of those stocks are running far ahead of the rosiest outlook for their businesses.
Case in point, shares of recently public Infinera, which had a $182 million IPO on June 7. The stock popped 52% on the day and at a recent price of $24.99 is up 27% since the close of its first day of trading.
Seven-year-old Infinera, which started life as Zepton Networks, makes equipment used by phone companies to expand the bandwidth of their networks. It has a promising future, with sales soaring from $2.6 million to $50 million in the most recent quarter. And it's finally generating positive cash flow despite continued net losses.
But even with a dramatic rise in sales this year and next, it would be hard to justify the current 20 times multiple of price-to-trailing 12-month sales -- a valuation that seems to assume unreasonable growth in the fiber-optic market.
Sunnyvale, Calif.-based Infinera is one of four recent fiber-optic IPOs. Judging by the track records of those stocks, one might pick up Infinera at a cheaper price soon.
Opnext, Optium and IPG Photonics, three recent fiber-optic IPOs, have traded down as much as 25% from the closing price on their first day of trading.
Barron's Online have been big believers that after the collapse of optical networking stars like Sycamore Networks and Corvis in 2000, the fiber-optic market is on the rebound.
We wrote over a year-and-a-half ago that a pickup in fiber-optic equipment sales would benefit Ciena and laser maker Finisar. The stocks went on to double and triple, respectively. (See Weekday Trader, "Fiber Optics May Be Back from the Grave1," Sept. 13, 2005.)
Some of the most astute luminaries of networking say that fiber-optic deployments that cratered in the dot-com era's implosion are being now rebooted.
"The world didn't end in 2000," says Len Bosack, a co-founder of Cisco Systems who is running a fiber-optic equipment start-up called XKL. "Storage is continuing to get less expensive [and therefore multiplying rapidly], people are using computers more and more in their businesses, and all these things have driven an increase in bandwidth demand."
But it's a fragile recovery. The total market for optical equipment around the world was just $9.2 billion last year, less than a quarter the size of the market for ce
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