Finisar helps put the "work" in network with optical components and subsystems that enable high-speed data communications over LANs or metro-area and storage-area networks (MANs/SANs). The company's subsystems include transmitters, receivers, transceivers, transponders, optical cables, and wavelength selective switches. Its components consist primarily of packaged lasers, photodetectors, and passive devices. The company sells products to manufacturers of storage systems, networking equipment, and telecom equipment. Customers have included such tech giants as Alcatel-Lucent, Brocade, Ciena, EMC, Ericcson, HP, and IBM. Finisar gets nearly three-quarters of sales from customers located outside the US.
At 29% of sales, Malaysia is Finisar's largest international location, with China a close second at 19% of sales; the company established manufacturing operations in the two countries to take advantage of lower labor costs and be closer to customers. In addition, the company has operations located in Australia, Denmark, India, Israel, Norway, Singapore, South Korea, and Sweden.
Finisar has a limited number of customers for its products, with the top ten representing nearly 60% of sales. Cisco Systems and Huawei Technologies were its top customers in 2012, each accounting for more than 10% of sales. Customers of the company, in turn, sell their systems to their own customers, which consist of wireline and wireless telecom service providers and cable TV operators.
Overall sales for Finisar were essentially flat in fiscal 2012, increasing 0.4% to $952 million. Sales of datacom products rose 12.4% as enterprises continued to update their infrastructure in response to demand for greater bandwidth. Sales to the telecom market fell 11.8% on lower demand as customers adjusted excess inventory levels, partially offset by nearly a full year of sales from its Ignis telecom acquisition. Net income for the year was down more than 50% on its share in losses of Ignis, higher operating costs, and amortization of acquired technology.
Finisar has grown in part through an aggressive acquisition strategy. In the century's first decade the company acquired more than 10 firms and bought assets and businesses from six other companies. More recently the company acquired US-based optical amplification company RED-C Optical Networks, which has its primary operations in Tel Aviv. The deal boosted Finisar's portfolio for telecom applications.
Also in 2012 Finisar acquired Norwegian optical components maker Ignis to expand in the Nordic region of Europe and ensure a supply of tunable laser products. Tunable lasers are a vital component of Finisar's products and securing an internal supply is essential to its vertical integration strategy.
In 2009 Finisar sold its network tools business to archrival JDS Uniphase for about $40 million in cash, becoming a pure supplier of optical components in the process. – less