) recently signed a definitive agreement to sell the assets of
its Santa Rosa thin film filter business to Photop Technologies,
Photop Technologies, Inc., is a wholly-owned subsidiary of
). Following the asset sale, Oclaro will also divest its
interleaver product line to Photop Koncent, Inc. (FuZhou), a
wholly owned subsidiary of II-VI.
The company expect to complete both the divestitures by
December 3, 2012.
Oclaro expects to receive $27 million in cash from the sale of
these assets, $23 million to be paid upon closing, $3 million
payable on or before December 28, 2012 and $1 million to be held
in escrow until December 31, 2013.
Oclaro expects to focus on its core competencies using the
proceeds from divestiture of its thin film filter business and
the interleave product line.
Management plans to use the proceeds from these deals to
improve its balance sheet and provide additional operating
flexibility to better serve its global customer base.
These asset lines generated revenues of $3.6 million in the
September quarter. However, the sale of these product lines will
reduce revenues for the December quarter by approximately $2
million. Oclaro expects to report revenues between $145 million
and $162 million in the December quarter.
The acquisition of Oclaro's product lines are expected to
strengthen Photop's core business and broaden its global
footprint and facilitate diversification into the growing life
Meanwhile, earnings estimates for Oclaro for fiscal 2013
plummeted significantly after the company missed the estimates by
13 cents in the first quarter of fiscal 2013.
The first quarter results were affected by the company's
execution issues and the intensive integration efforts during the
quarter. Oclaro and Opnext completed their merger on July 23,
In addition, in tandem with other industries, the optical
component industry is currently going through a downtrend. We
continue to maintain a Neutral recommendation on Oclaro, Inc. In
the near term, we have a Zacks #4 Rank, which translates into a
short-term rating of Sell.
II-VI INCORP (IIVI): Free Stock Analysis
OCLARO INC (OCLR): Free Stock Analysis Report
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