OCLR

Oclaro, Inc. (OCLR)

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Oclaro, Inc. (OCLR)

Citi Technology Conference

September 06, 2012 03:30 pm ET

Executives

Jerry Turin - Chief Financial Officer

Analysts

Kevin Dennean - Citi

Presentation

Jerry Turin

I think they are stable from what we've talked about this since our quarterly announcement which was a relatively tempered view.

Kevin Dennean - Citi

Right. Okay, so no change since your last public?

Jerry Turin

I would say consistent, but a tempered view, which is what we came out with.

Kevin Dennean

This is probably question that's hard for you to answer because of the nature you shipped from one place where they might installed elsewhere. Do you have a view that see notion of better, worse or the same? Do you have any sense for that on a geographic basis, right? And, we know you shipped (Inaudible) assembled there and deployed in EMEA, so you might not have perfect visibility. Not it's a real good question, because we've been finding and speaking in geographic terms as far as big picture end market has been the most effective way of understanding the market dynamics. Right now in recent quarters, where Europe has clearly been soft.

The first six months was dramatically from the first six months of last year from some industry data that I saw recently, and certainly not getting any stronger. North America kind of flat, choppy carriers tend to be deploying it feels like and more point as opposed to big rollouts. That feel is consistent.

China kind of inconsistent. It wasn't bad for six months, but mixed messages on the next six months and kind of consistent with the macroeconomic conditions in China. Are they stimulate growth, or they want to minimize growth. How are they managing that inconsistency plays through and from a market point of view and rest of world seems to have mix of all of that very consistent for the macro economic conditions and there has really not been any change by geography. I think those sorts of conditions continue to be the way our view and consistent to what I think I hear from peers and parallel spaces and so forth.

Kevin Dennean

Last question that we are all the companies and you're in a little bit of unique position (Inaudible) given the merger and given recovery from flood, but top priority for use cash seem keep on the balance sheet and grow it going forward. Not too much interest in buybacks, M&A, and we've clearly got to focus our cash resources on executing the deal and turning ourselves from an operating point of view to cash positive, which is something we are working hard on and we know it's going to take more than a quarter or so as far as the integration of the teams to go together.

I would also add from our point of view that the focus on the business plan and focus on the merger just from a resource and focus point of view other than cash, we've got a lot on our table, we are moving some backend manufacturing, we are executing the deal itself and integration of the companies and you don't want to de-focus yourself too much, so that reinforces that point from our point of view.

Kevin Dennean

Make sense, so you mentioned the merger, so let's take a deeper look at the merger. If we look at Oclaro, pre-Opnext merger, Oclaro was a result of the Bookham and Avanex merger. Now we've got Bookham plus Avanex, so can you walk us through why one can be greater than three? So what's the power of this merged entity why where will Oclaro be more successful post the Opnext merger than previously?

Jerry Turin

There's a lot of ways to look at that. First of all, from a bottom line cost base point of view, you certainly generated a lot of operating expense efficiencies going from three public companies to one public company going from three sales forces largely focused at the same customer base to one sales force in corresponding marketing support.

From an R&D point of view, there are areas of concentration of R&D resources where multiple companies were going after similar opportunities. You now concentrate those resources, maybe have some cost savings, but also have more resource going after the same solution both, in the case of Avanex, but even more so in the case of Opnext one of the strengths of Oclaro that goes book them as a predecessor is a lot of strength at the component level, lasers, modulators, receivers, tunability integrated devices, what we believe are some of the world's leading optical fabs that create some of the leading components that part of our strategy is leveraged that into vertical integration in the higher level products whether that's transponders, transceivers even in the amplifier line card space and Opnext has a significant strength at the transceiver skill set, legacy technology presence, but probably not as vertically integrated as it could be, so you bring the component strength from Oclaro to strengthen the position of Opnext in those module and device levels, both in telecom, both where we have shared leadership in 40-gig and going to 100-gig, but also on the data com enterprise side of the world where Opnext has a reasonable position, good reputation for quality, but it's probably a tier-two because of the lack of that vertical integration.

From Oclaro point of view, we think we have some very interesting laser technology that fits very well within the way the data com markets are going both, on the client side, both on short pluggables, maybe an optical interconnect of different sorts in the long-term, but we couldn't really operate our technology into those markets without an existing presence, so we think certainly strengthened the former Opnext offerings in all those area.

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