New data-center technology to hit Finisar: Jefferies

Fri Jan 18, 2013 10:42am EST

Jan 18 (Reuters) - Jefferies & Co downgraded Finisar Corp's stock, saying demand for the company's traditional optical communication components could be hit by new silicon-photonics products from Intel Corp and Cisco Systems Inc.

Finisar shares fell 8 percent to $14.33 on Friday morning on the Nasdaq.

Intel said silicon-photonics technology for data centers could soon be available commercially.

Intel's silicon products would be "bad news for manufacturers of traditional, manually-assembled optical transceivers for data centers, such as Finisar," analyst James Kisner wrote in a note.

Integrating silicon photonics will allow for much higher data transfers between processors and devices than is possible with electronics-based optical components, translating into lesser hardware requirement and lower building and operation costs.

"While we suspect it will be a while before we see optical transceivers from Intel, our checks suggest a number of players, including Cisco, are likely to launch silicon photonics-based transceivers for 100G applications in the data center in 2013 and 2014," Kisner wrote.

Kisner downgraded Finisar's stock to "underperform" from "hold" and nearly halved its price target to $7.50.

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