Core Viewpoint - Ciena Corp reported strong fourth-quarter results and provided optimistic guidance for 2026, despite a decline in stock price following analyst upgrades to price forecasts [1][8]. Financial Performance - Fourth-quarter revenue increased by 20% year-over-year and 11% sequentially, reaching $1.35 billion, which was approximately $70 million (5%) above analyst estimates [2]. - Gross margins improved to 43.4%, up 150 basis points quarter-over-quarter and 80 basis points above the firm's model [2]. - Adjusted EPS for the quarter was $0.91, exceeding the estimate of $0.74 by 28% [2]. Annual Results - For the full fiscal year, Ciena achieved $4.77 billion in revenue and $7.8 billion in orders, ending fiscal 2025 with a backlog of roughly $5 billion compared to $2.1 billion the previous year [3]. Guidance and Expectations - Ciena projected first-quarter 2026 revenue to be around $1.39 billion, representing a sequential increase and approximately 30% year-over-year growth, which is $140 million (11%) above consensus [4]. - The company raised its fiscal 2026 revenue growth guidance to a range of 20%–28%, surpassing previous expectations [4]. Margin Outlook - Ciena indicated first-quarter gross margins near 43.5% but anticipated a dip in Q2 2026 due to increased 800ZR revenue for scale-across work, with expectations for margin improvement in the second half of 2026 [5]. - The fiscal 2026 operating margin target was lifted to 17% from 16%, supported by revenue growth and stable operating expenses year-over-year [5]. Earnings Projections - The analyst raised the fiscal 2026 EPS forecast to $5.25 from $4.25 and introduced a fiscal 2027 EPS estimate of $6.78, noting that these figures are conservative [6]. - Upside scenarios with over 30% revenue growth and low-20s operating margins could potentially increase earnings by $10–$12 [6]. Market Position - Ciena is expected to capture nearly 100% of line systems for scale-across in fiscal 2026, leveraging its unique Hyper Rail/Multi Rail technology, and is anticipated to dominate the 800ZR pluggable market [7]. - Initial scale-across deployments began in Q4 2025, with estimates of numerous projects in fiscal 2026, each contributing high tens of millions to low hundreds of millions in revenue [8].

Summary of Conference Call Company Overview - The conference call features Fabrinet, a company involved in IT hardware and communications equipment, with a focus on optical and transceiver manufacturing. Key Industry Insights Telecom and Data Center Interconnect (DCI) - Fabrinet has recently separated DCI from its telecom reporting to provide clearer visibility on growth, driven primarily by the Datacom sector [4][14] - DCI products, particularly 400ZR and 800ZR, are experiencing strong growth, with five main customers contributing to this segment [4][5] - The demand for DCI is robust, with expectations for sustainable growth over the coming years [15][14] - Traditional telecom business is growing but at a more stable rate compared to the exponential growth seen in DCI [20][24] High-Performance Computing (HPC) - Fabrinet has initiated a new HPC category, primarily serving AWS, with a revenue of $15 million from qualification volumes [28][30] - The company aims to establish a cost-competitive solution in the HPC market, with potential for significant growth [31][30] - The HPC business is expected to ramp up, with plans for additional product offerings beyond PCBAs [100][105] Capacity Expansion - Fabrinet is constructing Building 10, which will add $2.5 billion in revenue capacity, with a current run rate of $4.5 billion [39][40] - The new facility will be flexible, allowing for quick repurposing based on customer needs [41][44] - The capital expenditure for Building 10 is approximately $130 million, funded from existing cash reserves [45][46] Datacom Demand - Demand for transceivers in the Datacom sector is described as insatiable, particularly with the rise of AI data centers [69][70] - Fabrinet is producing advanced transceivers (200G, 800G, and 1.6T) but faces component shortages that limit production capacity [71][73] - The company is exploring opportunities with various customers, including traditional companies and hyperscalers [78][79] Automotive Sector - Fabrinet's automotive business is stable, with growth in EV charging infrastructure and LiDAR technology [94][95] - The company has captured a significant share of the LiDAR market, positioning itself for future growth as the technology gains traction [95] Financial Performance and Strategy - Fabrinet aims for a gross margin range of 12.5%-13%, with low operating expenses around 1.6%-1.7% of revenue [93][94] - The company has a strong financial position with no debt and approximately $1 billion in cash, allowing for self-funded growth [45][46] - Fabrinet's growth strategy focuses on maintaining a compound annual growth rate of 16% over the past decade, with plans to continue this trend [130][130] Additional Considerations - The company emphasizes the importance of performance and customer satisfaction in securing additional business opportunities [106][107] - Fabrinet is committed to long-term planning, utilizing an eight-quarter rolling revenue forecast to guide its growth strategy [129][130] - The company is open to diversifying its product offerings beyond optical solutions, depending on customer demand [85][86]