Finisar’s Stock Crushed Due to Weak Demand in China

Jun 15, 2011
J. Webster
Comments Off on Finisar’s Stock Crushed Due to Weak Demand in China

Talk about getting beaten down and crushed, Finisar Corporation (FNSR), the maker of optical networking equipment, was beaten down by nearly 7% when the market was open and then got the bat taken to them again after hours, as it’s now down by over 16%. The stock is down over 50% since March 4th. Wow.

The company reported net income of $16.4 million for the three months ended April 30, compared with net income of $14.2 million a year earlier. On a per-share basis, Finsar earned 17 cents a share for the latest quarter on more shares outstanding, down from 19 cents a share in the prior-year period.

Why the dramatic drop? It’s all about China it seems and the all to painful weak forecast.

“Our business continues to suffer from weak demand from telecom customers,” Chairman Jerry Rawls said on a conference call with analysts.

“In particular, the slowdown in telecom business in China continues to impact our revenue.

How often does this happen? Too many times. Good companies that are loved by many run up and up and then there’s a correction, a slow down, and inventory correction, and then the stocks make their march right back up again. That’s is to say the good ones. These stocks are not for the faint of heart.

“As we look, historically, at inventory corrections in our industry, they typically have taken one to three quarters. We’re very hopeful that this one is a two quarter phenomenon and then growth will resume,” Rawls said.

Source: Reuters

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