This afternoon’s earnings reports bring nice results for fiber-optic component supplier Finisar (FNSR) and contract electronics manufacturer Jabil (JBL), but a bit of disappointment for investors in software powerhouse Adobe Systems (ADBE).
Finisar stock is up 23 cents, or 1.3%, at $17.93, in late trading, after the company missed with its profit for the April-ending fiscal Q4, but beat on revenue and forecast this quarter’s revenue just slightly below consensus.
Revenue for the three months fell 13%, year over year, to $310 million, yielding earnings per share of 5 cents. Analysts had been modeling $309.9 million and a 12-cent profit per share.
CEO Michael Hurlston said the company was “disappointed” with the results, and he pointed in particular to a decline in gross profit margin, to 20.2% from 26.5% in the prior quarter. Hurlston said margin was under pressure because the fixed manufacturing costs in its VCSEL laser factory in Allen, Texas, were not fully covered by its level of sales of the parts.
Sales of “datacom” products at Finisar, which includes the VCSEL lasers, were down 6.8% from the prior quarter, at $266.1 million. Finisar’s sales were hurt by lower sales into “3-D sensing” applications. 3-D sensing is code for “augmented reality” functions, of which the most prominent these days is the “Face ID” function on Apple’s (AAPL) iPhone X. Lumentum (LITE), a competitor to Finisar, has gotten the lion’s share of that business at Apple to date, analysts generally believe.
But Finisar signed a supply agreement with Apple back in December for the iPhone maker to commit $390 million in funding to expand Finisar’s VCSEL production in the U.S.
Hurlston said that “both revenues and gross margins will increase” this quarter. He added, “We have begun to make changes at Finisar that I believe will not only bring more focus to our product development efforts, but will lead to better execution and efficiency, allowing the company to reduce relative expense levels.”
For the current quarter, the company sees revenue of $305 million to $325 million, which, at the midpoint, is just slightly below the average estimate for $317 million. The forecast for EPS of 10 cents to 16 cents is below the average estimate for 15 cents per share.
Jabil results beat, adds buyback power
Jabil stock is up $1.32, over 4%, at $30.98, after the company ’s fiscal Q3 report beat on both the top and bottom line, and it announced it has added $350 million to its buyback authorization.
Jabil revenue was up 21%, year over year, at $5.44 billion, and EPS came in at 46 cents. That compares to the average estimate for $4.9 billion and 44 cents.
CEO Mark Mondello called the results “strong” and noted the company had to deal with a “challenging components market,” likely a reference to the big slowdown in smartphone sales that has dogged chip makers of late.
Mondello emphasized that results were much more “diverse” than prior quarters, with the company’s two lines of business, “DMS“ and “EMS,” seeing sales rise 36% and 12%, respectively.
The company’s $350 million worth of repurchase authorization adds to a remaining $134 million buyback reserve.
For this quarter, the company sees revenue well above consensus, at $5.2 billion to $5.6 billion, versus the consensus $5.19 billion, and EPS at 56 cents to 80 cents, in line with the consensus of 68 cents.
Adobe drops despite upbeat report
Adobe stock is down $8.20, or over 3%, at $249.90, even though it reported fiscal Q2 revenue and profit that both comfortably beat expectations, and offered an outlook for this quarter that was higher as well.
The company’s all-important metric, “annualized recurring revenue,” rose from the prior-year period by 6% from Q1’s level, to $6.06 billion. That includes both the “Creative” product line sales, and also the other division, “Document Cloud.”
CEO Shantanu Narayen said the report demonstrated “continued execution against this significant opportunity,” referring to the area of “transformative digital experiences.”
Revenue in the three months ended in April rose 24%, year over year, to $2.195 billion, yielding EPS of $1.66. That compares to consensus for $2.16 million and $1.54 per share.
CFO John Murphy said the company’s “momentum” is expected to continue in this second half of the fiscal year.
For this quarter, the company on the conference call just now forecast revenue of $2.24 billion and EPS of $1.68, topping the average estimates for $2.22 billion and $1.61, respectively.
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