Finisar Furlough Queried

The company appears to have shut for the holidays, fueling some New Year's Eve musings

January 1, 2004

2 Min Read
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The week between Christmas and New Year's is vacation time for many folk. It may also be time for some furtive company shutdowns -- when corporate bigwigs aim to save costs by quietly suspending business operations. After all, with most people's minds on eggnog and mistletoe, who'd be the wiser?

At least one analyst thinks the tactic could pay off. Shaw Wu of AmTech Research writes in a note today that SAN/LAN component maker Finisar Corp. (Nasdaq: FNSR) appears to be "in the midst of a firm-wide holiday lockdown with the exception of key revenue-generating employees."

Finisar had the answering machine on; no one could be reached in person to verify or deny. But Wu notes that if it's true the company's taken a temporary powder, the cost savings could make a dent of as much as $1 million in the company's operating expenses, which he estimates will be about $21.3 million for the January quarter.

Wu, who has a Buy rating on Finisar, is predicting the company will show revenues of $46 million and an operating loss of about $10 million, less than last quarter's $12 million (see Finisar Halves Q2 Losses).

Wu says he's not aware of any other companies he covers adopting a holiday furlough implying unpaid leave. But he says at least one other company in the storage networking space, Network Appliance Inc. (Nasdaq: NTAP), took the approach a couple of years ago. NetApp couldn't be reached to confirm.Finisar may not be alone, but it's tough to tell. Many companies in the storage and data networking components markets weren't answering their phones this week; many seemed to have an "after hours" message turned on, in which hitting "o" for operator loops the caller back to the initial recorded greeting.

One thing: Finisar execs may need some extra time off this holiday season. According to Shaw Wu, there is "renewed speculation in both financial and industry circles of a pending acquisition of Finisar by another optical vendor." Biggest candidate for buyer: JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU).

"[W]e believe that JDS Uniphase... could be a potential acquirer, as this makes strategic sense. JDSU is arguably the strongest player in optical components for telecom applications yet remains weak in optics for edge/data networking applications including SAN/LAN/MAN. Finisar is strong in JDSU's weak areas and we think a combination of the two companies makes good business sense," Wu writes.

JDSU could not be reached for comment.

Mary Jander, Site Editor, Byte and Switch

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