Zacks_Analysts' Blog : Oplink Beats Zacks Consensus - Analyst Blog

On a GAAP basis, net income was $249,000, or 1 cent per share. On a non-GAAP basis (excluding stock based compensation, amortization of intangibles and loss on sale of assets), EPS came in at 15 cents, easily beating the Zacks Consensus Estimate of 4 cents.

Total revenues for fiscal 2009 were $143.7 million, down 18.5% from a year ago. Net loss on GAAP basis was $13.8 million, or 67 cents. On a non-GAAP basis, net income stood at 52 cents.

Going forward, management stated that order visibility remains limited and expects revenues between $30 million and $34 million in the first quarter of fiscal 2010. Non-GAAP EPS is projected between 13 cents and 19 cents.

California-based Oplink provides design, integration, and optical manufacturing solutions (OMS) for optical networking components and subsystems.

The company believes it will drive growth going forward based on existing lean inventory levels at most of its customers, modest growth in telecommunications spending and upside potential from new design wins.

Oplink belongs to the smaller players in the optical networking component industry, which is dominated by bigwigs like JDS Uniphase (JDSU) and Finisar (FNSR). The company serves two important customers – Tellabs Inc. (TLAB) and Huawei. Nortel Networks, which was one of the prime customers of the company, filed for bankruptcy earlier this year.

However, Oplink continues to manage its business well despite the economic crisis. Margins continue to hold up as the management focuses on lowering the cost structure. Earlier, the company reduced its headcount and implemented other cost cutting measures, which include a temporary reduction in compensation for employees in North America and consolidation of its Calabasas facility into Fremont.

Meanwhile, the company aims to invest selectively in the next generation platform technology upgrade.

We believe business levels will remain lackluster until the large carriers resume meaningful capital spending, which could happen in the back-half of 2009 given potential government broadband infrastructure stimulus packages promised in key markets, including the U.S. and China.