Oclaro, Inc. (NASDAQ:OCLR)

new product momentum in 40G transponders, coherent products (critical in 40g+ networks),40G and 100G modulators and recievers,10G tuneable XFP lasers, and WSS 1x23 high port count will help with revenue going forward. In fact they mentioned they started shipping some tunable XFP lasers, in volume, to a Tier 1 carrier.

Company implemented a cost reduction plan and believe by June of 2012 fixed cost will be reduce to approximately $110m.
Here is the plan:
1. Shifted some production from Zurich to the Shenzen facility and divested some older products no longer in the target market.
2. Outsourcing all back end manufacturing (assembly and test) to 2 contract manufacturers, Fabrinet and one other.
3. Oclaro will keep R&D personnel in the plants to ensure continuity of process and quality. Many of Oclaro's long time customers have long time relationships with the contract manufacturers so they expect a seamless transition.
4. Reduced employee count from 2,800 to 1,200.
5. Shifting to a slightly more variable cost model. This will help with final pricing flexibility and thus should be able to offset some margin erosion with volume. This will make them much more competitive to say Finisar.

Also on the November call, Alain said sales in the first 3 weeks of q4 were tracking 10% higher then q3. The Thailand floods are expected to hit revenue by 30m. Oclaro updated guidance on Jan 3 saying revenue would come in at 86m. So, taking out the impact from the floods, revenue would have come in at about 116m. Alain also said new product adoption is accelerating. I feel that analysts are much too low on both revenue and eps for q1 and q2 and will be adjusting these numbers higher now. They will have to write down equipment and inventory losses from the floods, but will be offset somewhat by business insurance policies of Oclaros' but also Fabrinets'. Oclaro will also book 35m unusual income in q1 from the sale of the shenzen facility. March EPS might be as much as $.25-.35.

With a balance sheet with net cash is somewhere in the neighborhood of $2.00 and a stock price of $4.17 this maybe a very solid investment with great short term gain potential.

http://investor.oclaro.com/secfiling.cfm?filingID=1193125-12-3699