NeoPhotonics Corp (NYSE:NPTN) Slammed on Earnings Report

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Investors are an unforgiving lot. Despite unprecedented demand for its 100G and faster optics products, NeoPhotonics Corp (NYSE:NPTN), which makes optoelectronic components for high-speed fiber-optic networking equipment, was beaten down Friday for a disappointing quarterly result.

Shares fell 22.92% to $11.23 with as many as 4.56 million changing hands.

Technically, after Friday’s high volume collapse, NeoPhotonics is now trading below all three of 20-, 50- and 200-day moving averages, indicating the possibility of more bearishness. However, the long term rising trend line support, in place since early 2015, has not yet broken, so there is hope yet that this may only be a correction.

NeoPhotonics Corp (NYSE:NPTN) done in by Chinese bankruptcy

For the third quarter, Neo reported EPS of $0.06 which missed by $0.08 and revenue of $103.3 million, which missed by $0.74 million but was up 23.6% year on year.

The results include a hit of $2.25 million, to both revenue and profit, from the bankruptcy of a Chinese distributor.

“In our third quarter NeoPhotonics delivered solid results with revenue of $103.3 million. High Speed 100G and above products again increased to a record 67% of revenue with unprecedented demand for our 100G and beyond products, which we are seeing as a sustaining mid-term trend,” stated Tim Jenks, President and CEO of NeoPhotonics. “Demand for leading edge high speed products plays directly into our core competencies, making us optimistic about our growth prospects going forward.”

The company had cash and cash equivalents aggregating $102.9 million as at end-September.

NeoPhotonics Corp (NYSE:NPTN) guidance for the fourth quarter

For the fourth quarter, Neo expects revenue in the range of $109 to $115 million and earnings per share in the range $0.13 to $0.21.

The company spent $15 million to expand capacity during the quarter, as it focuses on High Speed 100G and beyond products.

“We have been steadily investing in and expanding our high speed capability and product solutions for several years,” said CEO, Tim Jenks on the conference call. “Our full product portfolio will be focused on the highest performance and highest speed requirements, which are in the highest growth market segments,” he added.

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