FNSR

[David Randolph]

Profile for FNSR: Finisar Corporation is a technology leader for fiber optic subsystems and network test and monitoring systems. These products enable high-speed data communications for networking and storage applications over Gigabit Ethernet local area networks (LANs), Fibre Channel storage area networks (SANs), and metropolitan area networks (MANs) Fibre Channel, IP, SAS, SATA and SONET/SDH-based protocols. The Company's headquarters is in Sunnyvale, California, USA. www.finisar.com

The company will release earnings on December 1st: Finisar Corporation Schedules Conference Call and Webcast for Fiscal Second Quarter Results December 1, 2005

There's an interesting post on the Yahoo message board that makes sense to me (usually there are some good things there, one just has to filter a lot), please take a look: http://finance.messages.yahoo.com/bbs?.mm=FN&action=m&board=1600465552&tid=fnsr&sid=1600465552&mid=182370

Here's the all history chart on a semi-log scale:



The stock recently broke out of a descending trendline. Now the trend is bullish as we can see on the chart below:



The increasing price and volume pattern tells me the «blowout quarter» rumor is feeding on itself and it is not likely to end before the earnings release. It is a buy the rumor (rumor based on plausible expectations), sell the fact trade.

I will buy FNSR at today's open for the 3 Stocks on Fire Portfolio, 6.66% of capital as always. I need to be full invested in current market environment.

[shawFund]

Good pick.

In my post on Sept 2 in another thread (momentum study), FNSR has been identified as one of break-out due to good earnings (last quarter). NWRE is identified as another break-out stock due to upside guidence in the same post.

Both gained 50% since then.

I have been holding both of them. The gain is about 50% so far.

The earning momentum continues into this quarter for both stocks.

Pay attention to ISO also. Its fundamental is improving, revenue increased 4 times compared to last year's and huge recent insider buyings.

[Terliso]

i got in into this last monday...  good pick David..

[voova99]

Institutional is out.. 

http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?ticker=fnsr

[David Randolph]

Good pick.

In my post on Sept 2 in another thread (momentum study), FNSR has been identified as one of break-out due to good earnings (last quarter). NWRE is identified as another break-out stock due to upside guidance in the same post.

Both gained 50% since then.

I have been holding both of them. The gain is about 50% so far.

The earning momentum continues into this quarter for both stocks.

Pay attention to ISO also. Its fundamental is improving, revenue increased 4 times compared to last year's and huge recent insider buying.

Thanks for your comments shawFund  I think ISO is too small for the 3 Stocks on Fire Portfolio, but I hope it does well 

i got in into this last Monday... good pick David..

Thanks Terlisa, I wish I got in on Monday too 

Institutional is out..

http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?ticker=fnsr

Yes, that explains the stock coming down a bit yesterday, but I don't follow institutional traders. It is still too early to know if this trade will be successful or not, I'll give it another day.

Thank you 

[fill_the_gap]

http://compoundsemiconductor.net/articles/magazine/11/10/4/1

Consumer diversification aids Finisar's march to profitability
Fiber-optic component manufacturers Finisar and Avanex believe their financial and technological strategies will bear fruit next year in the form of profitability.

As the situation appears to be looking up in the photonic components business, the big question now is this: when will the improving conditions translate into profitability for optoelectronic chip manufacturers?

Two of the major suppliers - Avanex and Finisar - have indicated in recent presentations to the investment community that they expect this to happen in 2006.

Both believe that they will post an operating profit next year as revenues steadily increase and the results of cost-cutting actions coincide on what Finisar CEO Jerry Rawls calls "the march to profitability".

Finisar certainly seems to be making some decent headway in that direction. As revenue from the Infineon business it acquired early this year kicked in, Finisar's top line of $81.7 million in its most recent quarter represented the highest yet recorded in company history. What's more, its cash balance figures over the past year indicate a near-negligible rate of cash burn (see graph, below). Finisar's cash reserves have also been boosted by $12 million resulting from the sale of Sensors Unlimited, in which it held a minority stake, to aerospace giant Goodrich.


Stopping the rot
An even more promising sign is that Finisar's operational improvement was largely due to sales from its optics business unit rather than its network tools division. In the three months that ended July 31, optics revenue was up 35% on the same period last year. The acquired Infineon product lines contributed around 40% to this increase, indicating a pretty healthy "organic" yearly growth rate of 20%.

One important factor in Finisar's favor is that it does not rely too heavily on any single customer, with Cisco the only one to represent more than 10% of sales. Rawls now estimates that Finisar is the number-one optical module supplier in the storage area network (SAN) sector and is level with Agilent Technologies in local area networks (LANs). And with Agilent in the hands of a private equity group, there is perhaps an opportunity for Finisar to capitalize.

Away from the telecoms arena, Finisar is set to compete with Agilent in the consumer-led world of computer peripherals for the first time. That's because VCSEL technology acquired by Finisar when it bought Honeywell's laser diode business is now being exploited in a mouse designed by leading peripherals supplier Logitech - a company that uses Agilent optics in its existing laser-based mouse products.

Mass-production of these new optical mice, featuring VCSELs and an integrated monitor photodiode made by Finisar's Advanced Optical Components (AOC) division, is scheduled to begin in the final quarter of this calendar year. That should give Finisar penetration into a high-volume consumer market to augment the cyclical telecoms business. The Sunnyvale, CA, company is also hoping to penetrate the automotive datacom market in a further sign of diversification.

Rawls says that the VCSEL structures, which are manufactured at the company's wafer fab in Texas, could even find volume application in identification devices, printers and mobile phones.

After factoring all of that, as well as a fast-dropping revenue break-even point, into his financial predictions, Rawls estimates that Finisar will be able to post an operating profit in the third quarter of fiscal 2006, which ends in January next year. If he's right, Finisar will be generating cash flow at that point, with more cost reductions set to follow as chips manufactured at Finisar's Fremont fab are incorporated into modules that previously featured lasers supplied externally.

"It has been four years since the Internet boom collapsed, forever changing the competitive dynamics of our industry," remarked the CEO in a recent conference call. "We have reached a point where our highest priority is our march to profitability."

As Finisar jostles with JDSU and Agilent for the leading positions in the fiber-optic components market, another local rival in the form of Avanex is also sounding the profitability horn.

Recent downsizing, including a workforce reduction of 60% at its fab in Nozay, France, as well as the completion of a plan to consolidate module manufacturing operations into its Thailand facility, should be almost completed by the end of this year. Excluding costs resulting from that restructuring process, Avanex now says that it will be generating cash by June 2006.


Bumping along
Whether that will convince any would-be investors is not certain, bearing in mind that Avanex is facing the prospect of being de-listed from the Nasdaq exchange after its stock price bumped along at less than $1 for 30 consecutive days recently. Further worries may result from an audit by Deloitte and Touche, which indicated accounting problems and a need for Avanex to raise more cash to survive. Finisar's stock had been looking set to face a similar fate until a sharp uptick in late August (see graph, left).

Another of Finisar's competitors, Bookham, has been rapidly burning cash for years, but it has made a series of recent moves towards boosting its liquidity. A tax break worth nearly $12 million and the sale of land in the south of England for $15 million have had an immediate positive effect, while the company plans to add cash to the balance-sheet through another public offering of stock that could potentially realize a further $35 million.

[voova99]

FNSR concerned -
http://www.cir-inc.com/news/pr_detail.cfm?PRID=154

They were first in that technology . Not bad 

[David Randolph]

Thanks for those 2 articles, quite interesting 

FNSR is the only losing stock on the 3 Stocks on Fire Portfolio, but I think the stock just touched support and it will recover soon.

I'll continue holding it whatever happens over the short term.

[voova99]

FYI

http://www.totaltele.com/View.aspx?ID=74158&t=4

Best,
Vova

[voova99]

FYI
from JDSU message board:

http://finance.messages.yahoo.com/bbs?.mm=FN&action=m&board=4687941&tid=unph&sid=4687941&mid=788294

Best,Vova

[David Randolph]

After today's close I'll design a trading plan for TSM, SOHU, KLIC and FNSR, but still not today. Although it is always important to have a plan, it is even more important to have the flexibility to change the plan when it is necessary.

Before the session starts I always know what to do with every stock I own. I don't have to watch the activity when the session is open to know what to do, just about 30 to 15 minutes before the closing bell.

For today my plan is to continue holding FNSR. This means I won't sell whatever happens today. After the close I will analyze again to see if I can come up with a technical trading plan.

[shawFund]

Pay attention to ISO also. Its fundamental is improving, revenue increased 4 times compared to last year's and huge recent insider buying.

Thanks for your comments shawFund  I think ISO is too small for the 3 Stocks on Fire Portfolio, but I hope it does well 

While the whole market turns bearish today, ISO made a break-out with big volume!!!

[David Randolph]

Yes shawFund, ISO appeared on my filter today, nice move  I hope I 3 SOF doesn't get like those funds that say «that company is too small» at $0.40 and then say «great buy» at $10 

Continuation of a good trade for you 

In contrast, FNSR dived 6.21% yesterday. That was pretty ugly, and since I'm already selling 3 out of just  8 stocks held on the 3 Stocks on Fire Portfolio, why not sell this horrible 9% loser too?

I have an ascending support at $1.65, will that work, or not? I don't know, what I do know is that the stock is 9% below my purchase price.

«The stock being x% below your buying price is a reason to sell and no other is necessary».

I'm neutral on the general market now and preparing to get bearish and start a short campaign. I don't want to risk losing a big chunk of my profits during the latest bull leg by being complacent with my losers.

Therefore, I'll dump it around the open.

[Amarens]

Once again I did not sell with David. Nice move yesterday. I sticked to my plan. My ascending TL is standing at $ 1,74 for today rising $ 0,03 a day. I don't think the bullish run is over. The powerful jump up from the ascending TL is affirming that. I will have a look at the opening. If it is up I might decide to take at least 5% profit ($ 1,93) and look for an oppertunity to buy back closer to the TL  .

Amarens

[snowcat]

Picture perfect chart - outstanding performance, Dave!
Keeps going up!
http://stockcharts.com/def/servlet/SC.web?c=fnsr,uu[r,a]waclyyay[de][pc10!c40!d20,2!h.02,.20!f][vc60][iut!Lb14!Ld21!Ll14!Lah12,26,9!Lm10!Lj[$spx]]&pref=G