Oclaro, Inc. (NASDAQ:OCLR) Preliminary Results Shoots Up Fiber Optic Demand


Oclaro, Inc. (NASDAQ:OCLR), which is scheduled to report F2Q17 earnings on January 31, released preliminary results for the quarter that showed revenue and operating income will come at the higher end of the company’s earlier internal projections.

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According to the F2Q update, Oclaro expects revenue in the band of $153.5 – $154 million, which compares with internal guidance of revenue in the band of $146 – $154 million. Wall Street on the other hand is expecting revenue of at least $150.5 million from Oclaro in F2Q.

Oclaro generated $135.5 million in revenue in F1Q17, topping the consensus estimate that called for revenue of $131.7 million for the quarter.

Oclaro further said it expected to report adjusted operating income of $36 million, strongly above the target that called for operating income in the range of $22 – $26 million.

“Our excellent preliminary results for the December quarter once again demonstrated the strength of Oclaro’s products in the markets we serve,” said Oclaro CEO Greg Dougherty.

Heavy demand for fiber components

Oclaro’s upbeat earnings for F2Q are attributed to strong sales of fiber component amid heavy demand for high-speed internet systems given the high data consumption of smartphones and the Internet of Things (IoT) initiative. Research firm IDC estimates that more than 28 billion devices such as cars will be added to the internet grid by 2020. Data center build-out by cloud computing giants such as Microsoft Corporation (NASDAQ:MSFT) and Amazon.com, Inc. (NASDAQ:AMZN) and network upgrade by carriers such as Verizon Communications, Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) have increased the demand for fiber optics and related gears, boosting sales for Oclaro and its peers.

Fiber component stocks registered huge gains in 2016 because of the heavy demand for their products.

Shares skyrocket in late trading

Though Oclaro shares had shed more than 0.6% during regular trading to $8.13 in the last session, the shares rose 9% in late trading following the upbeat preliminary results. Oclaro’s gains also sparked a rally in fellow fiber component stocks, including Finisar Corporation (NASDAQ:FNSR) and Ciena Corporation (NYSE:CIEN).

Applied Optoelectronics (AAOI) also posted strong earnings last week, driving its shares up.

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