Finisar Corp. (Sunnyvale, CA), which provides gigabit fiberoptic solutions for high-speed data networks, reports total revenues for the first quarter of fiscal 2002 of $34.2 million were in line with management's previous expectations as announced on July 26, 2001. Revenues were up 26% from the first quarter of fiscal 2001, but down sequentially by 35% from the immediately preceding quarter. Total revenues include sales of optical components and subsystems of $25.3 million and sales of network test and monitoring systems of $8.9 million. Sales of optical components and subsystems were up 15% from the first quarter of fiscal 2001, but down 40% sequentially. Sales of network test and monitoring systems were up 71% from the first quarter of fiscal 2001 but down sequentially by 14%. The financial statements for the quarter included the results of Transwave Fiber Inc., a recent acquisition, as of May 1.
During the quarter, Finisar recognized a number of noncash and cash charges related to deferred compensation, acquisitions, and inventory valuation. Pro forma results exclude these items for comparison purposes.
For the first quarter of fiscal 2002, the Company recognized a pro forma pretax loss of $12.9 million and a net loss of $8.3 million, or $0.05 per basic and diluted share, compared to a profit of $4.9 million, or $0.03 per diluted share, in the first quarter of fiscal 2001 and $0.9 million, or $0.00 per diluted share, in the previous quarter.
“Six months ago, we said that we thought the first quarter ended July 31 would mark the bottom of the industry downturn,” notes Jerry Rawls, Finisar president and CEO. “The correction turned out to be more severe than we had anticipated, but we think our estimate of its timing was correct. While visibility remains somewhat unclear, our recent design wins in the SAN, LAN, and metro markets are encouraging. We should be able to sustain, if not exceed, current revenue levels going forward.”
Current quarter, GAAP results
On a GAAP basis, including noncash and cash charges related to deferred compensation, acquisitions and inventory valuation, Finisar recorded a loss of $69.3 million, or $0.40 per share, in the first quarter of fiscal 2002. This is compared to net income of $3.2 million, or $0.02 per diluted share, in the first quarter of the prior year. Merger-related costs primarily reflect the acquisitions of Sensors Unlimited in the second fiscal quarter of 2001 ended October 31, 2000, Demeter Technologies in the third fiscal quarter of 2001 ended January 31, 2001, Medusa Technologies and Shomiti Systems during the fourth fiscal quarter of 2001 ended April 30, 2001, and Transwave Fiber during the first fiscal quarter of 2002 ended July 31, 2001. Merger-related costs include $30.8 million in amortization of acquired intangible assets, $3.2 million in amortization of deferred compensation, $2.7 million related to the purchase of in-process research and development and $6.8 million in amortization of acquired developed technology.
In conjunction with revised revenue guidance issued on July 26, 2001, Finisar has conducted an evaluation of its inventory position. As a result, the firm recorded a charge of $29.2 million in the first fiscal quarter for obsolete inventory, or $18.7 million after tax, including $2.5 million for non-cancelable or open purchase commitments related to such inventory.