Two Become One As Finisar Posts Record Sales
Just days after completing its merger with Optium, III-V component and subsystem manufacturer Finisar has posted record sales figures.
The California-based firm, which has compound semiconductor operations in both its home state and in Texas, delivered total revenue of just under $129 million - $115.8 million of which arose from sales of fiber-optic components and susbsystems.
With Optium also breaking records in the latest quarter, registering a best-ever $47.2 million in sales, the future looks good for the combined outfit.
"I want to avoid talking about Finisar and Optium as though we are two companies," said Jerry Rawls, now executive chairman following the merger, with Optium s Eitan Gertel appointed the new Finisar CEO. "We are now one company with a greatly expanded portfolio of products."
Rawls expects the firm s VCSEL fab in Richardson, TX, and its longer-wavelength laser chip manufacturing facility in Fremont, CA, to remain busy as robust demand continues to characterize the resurgent fiber-optics business.
"We are very enthusiastic about the outlook for our combined companies," Rawls added. "We see strong growth, particularly in the second half of our fiscal year, which starts in November. Overall our customers are optimistic about the next several quarters."
Rawls also explained that its revenues now represented a good indication of genuine production demand from customers, because of changes over recent years in the industry supply chain, and the way that companies like Finisar record their revenues.
Back in the telecom bubble era, sales revenues would have been recognized when a customer purchased components "“ even though these components may simply have piled up in the customer s inventory, rather than being applied in live systems.
According to the executive chairman, Finisar now realizes more than half of its revenue from so-called "just-in-time" inventory hub pulls.
"This means we don t recognize revenue until our customer pulls products from our inventory hub, [which is] physically located at their factory."
"That hub pull represents real production demand on their side," he explained. "In that regard, it s not like 2001, when finished goods were getting piled high."
A spin-off benefit of that new inventory management system is that component vendors like Finisar get to interact much more closely with their customers, and get a far better understanding of demand forecasts and future business.
With better visibility in place, Rawls is expecting new product qualifications at many customers to result in extra revenue over the next few quarters, even if the precise timing of those qualifications may be difficult to predict.
Rawls is now confident that the combination of Finisar and Optium, whose merger was sealed on August 29, will present a challenge to long-time industry leaders such as JDSU:
"With little product overlap, we now have one of the broadest portfolios in the industry," he said. "The merger will also combine Finisar s vertically integrated low-cost manufacturing capabilities with Optium s mass customization expertise to create a formidable supplier."
Expecting a rapid increase in demand for 10 Gb/s and 40 Gb/s applications, Rawls believes that the next couple of years will witness "an exciting period of growth", with as many as 40 different customers now qualifying Finisar s 10 Gb/s products.