Earnings Preview: Finisar & How To Trade It

Finisar FNSR is set to report earnings tonight after the bell, and if the optical networking company can report strong results and provide solid guidance, there are some potential names that should benefit from the report. At last check, shares of Finisar were trading at $17.78, down $1.26‎ or -6.62%‎ on the day. Analysts expect the company to report earnings of 33 cents per share on revenues of $242.89 million. Guidance for the next quarter will be extremely important, as it is expected to say it will earn 37 cents per share on $253.21 million in revenues. Analysts will also be looking forward to hearing what the company has to say regarding the Chinese market, where Finisar generates a significant portion of its revenue. If Finisar is able to report strong earnings, then names like JDSU JDSU, Oplink Communications, Inc OPLK, Ciena CIEN and Oclaro, Inc. OCLR should see some sympathy buying in after-hours trading. As of May 31, 2011, 11% of Finisar's float was sold short, so some of the shorts will cover their positions if Finisar is able to beat estimates. Shares are trading at 10 times next year's earnings, highlighting the uncertainty there is in the market about the sectors earnings going forward. Finisar Corporation designs, develops, manufactures, and markets optical subsystems and components that are used to interconnect equipment in short-distance local area networks (LANs), and storage area networks (SANs).