Loss Widens At Opnext

Opnext Inc. (OPXT: 1.98 0.00 0.00%) reported revenues of $76.1 million in the third quarter of fiscal 2010, down 6.1% sequentially.

 

Opnext designs, manufactures and markets optical modules and components that transmit and receive data. These components enable high-speed telecommunication and data communication networks globally. The company’s product portfolio includes 10Gbps and 40Gbps transceiver modules, including tunable transceivers.

 

Revenue from the sales of 10Gbps and less products increased 10.4% to $55.1 million. Revenue for 40Gbps and above products decreased 40.1% to $16.8 million, while revenue from the sales of industrial and commercial products increased 35.5% to $4.2 million. The decrease in 40Gbps and above revenue resulted primarily from a decline in the sales of 40Gbps subsystems.

 

On a year-over-year basis, revenues increased 7.9% primarily due to the acquisition of StrataLight Communications, which was acquired on January 9, 2009.

 

Cisco Systems Inc. (CSCO: 24.05 0.00 0.00%), Alcatel-Lucent (ALU: 2.98 0.00 0.00%), and Nokia Siemens Networks each represented 10% or more of total revenues in the quarter ended December 31, 2009. These three customers represented 54% of total revenues as compared to 56% in the previous quarter. The decrease resulted from lower 40Gbps subsystem sales to Nokia Siemens Networks and Cisco, partially offset by increased sales of 10Gbps and below to Cisco and Alcatel.

 

Gross margin was 18.5% for the quarter, down from 24.2% in the previous quarter primarily due to lower 40Gbps subsystem sales and a 70 basis point negative impact from foreign currency exchange fluctuations and hedging programs.

 

Net loss came in at $12.7 million or 14 cents per share compared to a net loss of $9.2 million or 14 cents per share in the September quarter. This was below the Zacks Consensus Estimate of a loss of 16 cents per share.

 

During the quarter, Opnext used $2.4 million of cash in capital expenditures and $3.8 million in operating activities. Cash and cash equivalents decreased $8.7 million to $146.3 million as of December 31, 2009, compared to $155.0 million as of September 30, 2009.

 

Going forward, management expects 10G and less revenues to increase modestly, in spite of price reductions. Moderate growth is projected in the 40G and above business, driven by a further growth in 40G modules, new 40G subsystems deployments, and the emergence of 100G. The recovery of industrial and commercial business revenues is expected to continue.

 

Based on the above factors, Opnext estimates revenues between $78 million and $83 million in the fourth quarter of fiscal 2010.