SOURCE: The Bedford Report

The Bedford Report

March 10, 2011 11:25 ET

Oclaro's Optimism Offset by Finisar's Warning -- Who to Believe?

The Bedford Report Provides Analyst Research on Finisar & Oclaro

NEW YORK, NY--(Marketwire - March 10, 2011) - After being on a steep uptrend for most of 2011, Optical Networking stocks have plummeted this week. Gloomy forward outlooks from two industry heavyweights have caused investor panic throughout the sector -- offsetting earlier optimistic outlooks from the analyst community. The Bedford Report examines the Optical Networking Industry and provides research reports on Finisar Corporation (NASDAQ: FNSR) and Oclaro, Inc. (NASDAQ: OCLR). Access to the full company reports can be found at:

Shares of Networking gear maker, Finisar, lost more than one-third of their value yesterday after executives warned of slowing demand in China, calling it an "industry wide phenomenon." China has been critical to Finisar's resurgence as the recession has taken its toll on spending in the US and Europe. Finisar said that fiscal fourth EPS would be in the range of $0.31-0.35 on revenues of $235-250 million; this compared to the Street consensus of $0.48 per share on revenues of $268.55 million.

Besides the slowdown in China, Finisar said the adjustment of inventory levels by some of its telecommunications customers is another reason for the shortfall.

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Oclaro is much more optimistic about its growth prospects than Finisar. Last month Oclaro forecast fiscal third-quarter earnings of 39-45 cents a share on revenue of $52-$56 million. Analysts were expecting earnings of 38 cents a share on revenue of $47.7 million. Alain Couder, president and CEO, Oclaro believes that "market conditions remain strong" and expects "revenue growth in the seasonally softer March quarter."

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