Fiscal third quarter revenue is $50 million. Gross margins were 32%. We expanded profitability and continued generating cash. Revenue growth was driven primarily by strength in our amplification products. Geographically, we saw revenue growth in the Pac Rim area driven by the approach of the Olympic Games in China. As we work towards our target of doubling our revenue by 2011, we expect half of our growth to come from markets we are entering in 2007 and 2008. We continue to invest in technology as evidenced by several important patents awarded during the quarter.
In addition, we are excited by a number of R&D initiatives that will serve to further strengthen our position as a competitive leader in the marketplace. As a definition, Avanex measures design wins by the revenue anticipated in the first 18 months of production. The design win is actually only recorded when all qualification work is done and the product is being purchased for deployment.
Now, I would like to review our performance by category. Please note that we have added a new chart on our Web site illustrating the growth in our served markets as we move forward. All market sizes are annual and reflect our serviceable market. The first is transmission. Included in this category are transceivers, transponders, modulators, and tunable dispersion compensators for 40-gig applications. We see transmission as a $600 million market opportunity growing to $1.1 billion by 2011. Transmission revenue was $15 million in the quarter. Design win performance in transmission was strong and represented over 50% of our total design wins during the quarter.
Of particular importance is that we secured a significant allocation of what we believe to be the largest tunable transponders slot in the world. Within transmission, approximately 90% of our design wins are colorless or tunable products addressing next-generation networks. In addition, we are now seeing design wins secured for 40-gig transmission applications.
The second category is amplification products. Amplification, which includes sophisticated control amplifiers, low-cost gain blocks and integrated optical performance monitoring is currently a $300 million market opportunity with a CAGR going forward of approximately 18%. Total revenue in this category for the quarter was $24 million. Amplifiers – amplification comprised approximately 30% over design win dollars during the quarter. We anticipate that our Oasis platform and our low-cost gain blocks will drive significant design wins over the coming quarters.
The third category is Wavelength Management, which includes both static and reconfigurable wavelength routing and switching. We see wavelength management as a $250 million market opportunity with CAGR driven by ROADM expansion of approximately 15%. Total revenue in this category for the quarter was $5 million.
Avanex's strategy is to provide a full portfolio of ROADM solutions selling at a variety of levels of integration that offer expanding revenue opportunities over the long term. Our goal is to be the cost leader for switching architectures. Revenue from our ROADM applications has begun, we expect that wavelength management design wins and revenue will provide vigorous growth in the coming fiscal year and beyond.
In line dispersion management revenue in the quarter was $6 million, the size of this market is $100 million growing at 14% CAGR. Fixed dispersion compensation is a relatively mature market and not a large focus for our investment dollars. Using tunable dispersion compensation for in-line applications is a potential growth area for the company. As you can see from these categories and our results, investments are translating into design wins that are fueling future growth for the company.
...
Customers with greater than 10% revenue in the quarter were Alcatel Lucent at 25% and Tellabs at 23%. Other strong customers were would Huawei and Ciena, both approaching the 10% mark.
...
seekingalpha.com |
