Finisar: De Facto Owner of VCSEL Space?

December, 2015

Given that we have learned that Avago Technologies intends to keep only the VCSEL chip fab (in March, we were the first news source to report that the supplier was selling such bare die to other module vendors) in its deal with Foxconn Interconnect Technology, our contention is that there is a good chance that a true duopoly likely no longer exits in the space, and that Finisar may by far become the overwhelming dominant vendor in the space. Simply put, we do not believe that Foxconn’s business model lends itself to becoming a real force in the transceiver business in general. Moreover, its ability to retain the “Avago” legacy, when it comes to 850nm wavelengths that goes back to the mid-1990s with the initial R&D efforts by Hewlett-Packard (later Agilent), will be a tremendous challenge. There is the caveat that extricating the VCSEL fab from the TOSA and subassemblies may be...

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EU Split Could Help Optical Space

June, 2016

Despite all of the unnecessary commotion and unjustified delirium of panic resulting from the Brexit referendum, we hope that it will lead to the dismantlement of the entire European Union, which we assert could bolster the economies of individual nations in general as well as the fiber optic businesses in each of the individual countries specifically. The EU resulted in just another layer of extraterritorial, bureaucratic rules and regulations on the continent, which has impeded market growth levels since its formation in 1993. However, unless Britain (and any other member states that decide to leave) take the necessary second step of a comprehensive abandonment of socialism within their own boundaries, which would be even more difficult to accomplish, investments will continue to be hampered. The situation in the UK itself requires true deregulation of the telecom space. Of course,...

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Nokia Directionless in Optics Space

September, 2016

An industry observer might ask a Nokia executive about its plans for 400G and there is a good chance that the response is more likely to be a general one reflecting a lot of uncertainty over what major moves to make in the optical marketplace. The commodity-like atmosphere affects other large vendors in the space as well with limited opportunities to differentiate with value-added software in the vast majority of the business. Yet, given its roots, culture, and organization, Nokia is uniquely searching for options that are likely beyond its reach or may just not turn out to be that attractive for future growth. Some of Nokia’s loss of market position has been self-inflicted. During Verizon’s unprecedented push with GPON, the supplier was the dominant force. With NG-PON2, it appears that the vendor may not even get a seat at the table for Verizon’s next big push, which like the...

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Finisar Execs Should Get Out Now

December, 2016

While the CEO of Finisar has been associated with the company for over 25 years, the average time that the rest of the executive management team has been in the optical components space is around 18 years. Undoubtedly, they have to understand how terribly unique their situation has become after years of mounting obstacles that have made its business quite unattractive in the recent past. The combination of the Street inexplicably driving up the valuation of a single company, Acacia Communications, to extremely unjustified levels, which positively affected other vendors in the market, along with the exploding demand for componentry in only one country, China, could not have been anticipated. It could be said with a high level of confidence that such a confluence of events will never happen again. Although we believe that Finisar still has room to somewhat improve its financial position...

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Oclaro’s Limited Options?

July, 2017

Regular followers of our other blog were able to read the recent article, “Oclaro's Possible Mistake,” in which we stated: “While we have been very complimentary toward the Oclaro leadership, we believe it could have made an error in advertising [to financial analysts] that it would be open to selling the company….Now that everything appears to be set up as well as possible for a purchase, [such as relatively attractive margins and an impressive balance sheet], what does Oclaro tell the Street, if it does not get a reasonable bid, which we assume would be no lower than $2 billion?” Optimally, it would have been better to stay relatively quiet about its intentions, and have potential suitors make unsolicited offers. Although in fairness, Oclaro tried to walk any such discussion back earlier this year, including by stating, “[C]ompanies get bought, not sold,” it seems to be...

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