Opnext, Inc. ([stock]OPXT[/stock]) recently released preliminary results for the fourth quarter. The company now expects revenues to come around $ 95.3 million in the fourth quarter of fiscal 2011, down from the previous guidance of $ 97.0 million – $ 102.0 million and the Zacks Consensus Estimate of $ 100.0 million.
The new guidance implies a sequential decline of 1.8%, but a 24.0% growth year over year. The downgrade in guidance is primarily due to a ten-day interruption in Opnext’s module manufacturing operations in Japan following the earthquake and tsunami on March 11, 2011.
Headquartered in Fremont, California, Opnext designs and manufactures optical subsystems, modules, and components for communication uses primarily in North America, Europe, Japan and Asia Pacific.
Opnext’s module assembly Totsuka facility in Japan suffered minor disruption due to the earthquake. Although shipments of subassemblies to contract manufacturers and shipments of finished goods to customers resumed on March 18, 2011, production at this facility was not reinstated until March 21, 2011.
Opnext’s chip production facility in Totsuka suffered minor damage and the repair process is currently in full swing. Opnext expects to restart full production at this facility by the end of April 2011. The company’s industrial and commercial production facility located in Komoro, Japan was unscathed and production at this facility resumed shortly following the earthquake.
The Komoro facility is currently being used to process pre-existing wafers from the Totsuka chip production facility pending full restoration of the Totsuka facility.
Meanwhile, Opnext continues to work with its suppliers affected by the earthquake and tsunami and related subsequent events to address component availability. In addition, Opnext is exploring alternative sources of supply. As the company continues to be impacted by the planned power outages in the Totsuka area, it is in the process of installing backup power capability to permit continuous operation.
We currently have a Neutral recommendation on Opnext supported by a Zacks #3 Rank which translates into a short-term rating of Hold.
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