NUFO Business Outlook:
"Based on our order backlog and expanded manufacturing capacity, we believe that the company will experience solid sequential growth between the second and third quarters. The incremental revenue will most likely be derived from our passive fiber optic products. Our first manufacturing facility in Shenzhen began limited production of passives in June. Volume shipments from this new 20,000 square-foot facility remain dependent on the timing of site qualifications by our customers. We believe that initial customer shipments from this site should commence in early August based on the current status of these qualifications," said Westrick.
"To support higher anticipated revenues in the future, we will accelerate manufacturing overhead spending to build the proper infrastructure for our rapidly growing worldwide operations. This additional spending will dampen the favorable impact of expected improvements in manufacturing efficiencies on our fiber optic products, thus affecting the rate of improvement in our gross margin percentage for the near term. Operating expenses, excluding deferred stock compensation charges, will also expand this quarter, particularly for research and development. Additionally, in response to strong customer demand we will increase our capital spending significantly during the second half of this year to further accelerate the growth of our manufacturing capacity," said Westrick.
The company is expanding its manufacturing capacity in multiple locations. In addition to its smaller first Shenzhen facility, the company secured in April 2000 a second Shenzhen factory site with total floor space of 250,000 square feet. The company has already begun the first phase of construction that will fit up approximately one-half of the floor space in this shell facility. Approximately 70,000 square feet of manufacturing space is scheduled for completion before the end of 2000. Production is expected to start in a portion of this space in the fourth quarter. The company also expects to move its corporate headquarters and add additional manufacturing capacity in a 130,000 square-foot building in San Jose, California in late 2000 or early 2001. |
