investor relations presentation november 30,...

World’s Largest Supplier of Optical Solutions for the Communications Industry


Investor Relations PresentationNovember 30, 2011

Financial Presentation and Forward Looking Statemen ts

� Forward Looking Statements

� This presentation contains forward-looking statements as defined under the Private Securities Litigation Act of 1995. Except for historical information, the matters discussed in this presentation contain forward-looking statements regarding future trends or events that involve risks and uncertainties. Please be aware that these statements are only predictions and that actual events or results may differ materially. Please refer to the Company’s Form 10-K and other interim reports as filed with the Securities and Exchange Commission for a discussion of those risk factors. The Company assumes no obligation to update the information in this presentation.

� GAAP Reconciliation

� References to financial measures in this presentation will include references to non-GAAP financial measures. In addition to reporting financial results in accordance with U.S. GAAP, Finisar provides supplemental information regarding its operating performance on a non-GAAP basis. Finisar believes this supplemental information provides investors and management with additional insight into its underlying core operating performance by excluding a number of non-cash and cash charges, as well as infrequently occurring gains or losses. Finisar provides a complete reconciliation between GAAP and non-GAAP financial information in its earnings release which is posted in the investor relations section of the company’s web site www.finisar.com.

� Financial guidance for fiscal Q3FY12 is per earnings call on November 30, 2011 and is not being updated or confirmed as of any other date.

2© 2011 Finisar Corporation

World’s Largest Supplier of Fiber Optic Components


Company Facts

Founded in 1988, IPO in 1999

Headquarters: Sunnyvale, CA (USA)

Global locations with 8900+ employees

Industry’s broadest product line

Market leader with growing share

Vertically integrated

Low cost, in-house manufacturing

1000+ US patents issued

Financially profitable

$381.3 $401.6

$497.1

$629.9

$948.8

$-

$100.0

$200.0

$300.0

$400.0

$500.0

$600.0

$700.0

$800.0

$900.0

$1,000.0

FY2007 FY2008 FY2009 FY2010 FY2011

Rev

enue

($M

)

Annual Revenue Growth

TELECOM

DATACOM

TELECOM

Broad Product Portfolio and Customer Base

5

SFP+SFP CFPX2/XENPAK

Active Cable

WDM passivesCML Laser Interleaver

300-pinXFP

CATV

PRODUCTS CUSTOMERS

ROADM line card

Tunable laser

AWG Splitters

QuadwireC.wire

QSFPCXP

DATACOM

Optical Engine

SFP

PON

WSS

XFP


Optical Transceivers for Datacom & Telecom

HuaweiOSN 8800

Emulex HBA

CiscoNexus 7000 Switches

BrocadeMLXe Router

Alcatel/Lucent1830 PSS System

Infinera DTN System

FINISAR

JDSU

Emcore

Oclaro

OpLink

Sumitomo/Excelight

Avago

OpNext

NeoPhotonics

7

Industry’s Broadest Product Portfolio

Source Photonics

TELECOMDATACOM

Optics Growth Drivers

7

0.240.6

1.2

2.2

3.8

6.3

0.0

2.0

4.0

6.0

2010 2011E 2012E 2013E 2014E 2015E

EB/Month

0

20

40

60

80

100

2010 2011E 2012E 2013E 2014E 2015E

EB/Month

Internet

Backbone

Mobile

Source: Cisco VNI 2011 Source: Cisco VNI Mobile 2011

© 2011 Finisar Corporation

Servers

Optical:Copper Port Ratio

10

1:5

1

2:1

BEFORE AFTER

Source: Cisco VNI Mobile 2011

Virtualization increases the use of optics in data centers

4.67.8

11.8

17.1

23.7

32.8

0

5

10

15

20

25

30

35

2010 2011E 2012E 2013E 2014E 2015E

EB/Month

VirtualizationVideo Traffic

Mobile BandwidthGlobal IP Traffic

Optics Markets Projected Strong Growth

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2010 2011E 2012E 2013E 2014E 2015E

© 2011 Finisar Corporation 8

Finisar Addressable Market

Source: Lightcounting September 2011 (transceivers); Infonetics September 2011(ROADMs); and Internal Estimates

($MM)

3,3783,718

4,2624,799

5,3225,849

Optics Market Leader with Growing Share


11.9% 11.9% 12.3%13.2%

14.2% 14.8% 15.4% 15.9% 15.8%

Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11

Market Share Growth

Source: Ovum

Source: Ovum

15.8%

10.5%

9.7%

8.5%

7.0%6.0%4.3%3.4%

3.3%3.2%

28.3%

Other

Sumitomo

Avago

Opnext Oclaro

Total Market Share (Q1 2011)

Source Photonics

JDSU

FinisarFinisar

Fujitsu

Neophotonics

Oplink

WSS/ROADM Line Cards


Addressable Market

0

200

400

600

800

2009 2011E 2013E 2015E($MM)Source: Infonetics 2011

WSS – Wavelength Selective SwitchROADM – Reconfigurable Optical Add/Drop Multiplexer

WSS modules and ROADM line cardsare designed for Long-Haul DWDMEquipment and Metro Optical Systems

ROADM line card with WSS module

ROADM functionality benefits • Allows point and click dynamic provisioning• Reduced carrier OPEX spending• Remote traffic management• Seamless all-optical transport layer• Flexible wavelength, bandwidth and data

allocation

WSS module

……

…

LCoS: Key WSS Differentiator


Flexgrid

Metro/Edge WSS

EWP Platform

Core WSS

DWP Platform

DWPf

Next Gen WSS

High Port CountIncreased Bandwidth for 100Gb/s

over 50GHz channel spacing

Instrumentation

WaveShaperSoftware programmable optics• Common Optical Switching Platform• Rapid development of new optical functionality• Mass customization enabled through software

Liquid Crystal on Silicon (LCoS)

Industry Technology Leadership

�


First to Market 100Gb/s Ethernet CFP Modules (2010)

First to Demonstrate 150Gb/s Active Optical Cable (2009)

First to Market 16GFC SAN Interconnection (2010)

First to Demonstrate WSS Flexgrid Technology (2010)

Features: Select channelwidths for initialdeployment

Adjust channelwidths on-the-fly toaccommodate futuretransmission speeds

Applications:StorageNetworkingHPC

Finisar 16G Fibre Channel Transceiver

Finisar 100GBASE-LR4 CFP Module

Differentiation Through Vertical Integration


Lasers and PhotodetectorsIntegrated Circuit Design

World-class analog and digital IC design team

World-class foundries

Highest volume shipping ICs in the industry

World-class analog and digital IC design team

World-class foundries

Highest volume shipping ICs in the industry

Majority of optics revenue contains internally-designed optical chips

Majority of optics revenue contains internally-designed optical chips

Optical Package Design

Majority of optical components used in our modules are designed and manufactured

in-house

Majority of optical components used in our modules are designed and manufactured

in-house

High-Volume, Low-Cost Manufacturing

Shanghai, China

Ipoh, Malaysia

Advantages: Cost, Quality, Responsiveness, IP Protection


Strategic Acquisitions in a Consolidating Industry

40Gbps Technology

November 2005

Big Bear Networks

CML Technology for 10-40Gbps

March 2007

Short wavelength VCSEL lasers

March 2004

Long wavelength FP and DFB lasers

April 2003

10Gbps Technology

January 2005

ROADM, CATV, 10-40Gbps

August 2008

PRODUCTS

VERTICAL INTEGRATION /TECHNOLOGY

Passive components

May 2002

New FocusSyntune tunable lasers, Splitters,

AWGs

May 2011

System on a Transceiver for PON

September 2010


Financial Overview

Q2 FY12 Highlights

� Q2FY12 Revenues of $241.5. million� Up 5.8% Q-Q

� Q2 FY12 non-GAAP profitability� Gross margin of 32.1%

� Operating income $23.6M – up 12.5% from Q1FY12

� Operating margin 9.8% - up from 9.2% in Q1FY12

� Earnings per share of $0.23 – up from $.21 in Q1FY12

� Strong Balance Sheet � Cash - $228.0M on October 30, 2011

� Convertible debt - $40.0M as of October 30, 2011

� Repaid $5.6 million of Ignis’s $9.9M debt during Q2FY12


0

100

200

300

400

500

600

700

800

900

1,000

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Annual Revenue

326.0381.3 401.6

497.1

629.9

948.8



($MM)

Fiscal year ends April 30th. Figures are non-GAAP and exclude Network Tools Division, which was divested.

Quarterly Revenue Growth


($MM)

Fiscal year ends April 30th. Figures are non-GAAP and exclude Network Tools Division, which was divested.

Strong Annual Growth

19

Fiscal year ends April 30th. Figures are non-GAAP and exclude Network Tools Division, which was divested.© 2011 Finisar Corporation

$497.1

$629.9

$948.8

$-$100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 $800.0 $900.0

$1,000.0

FY09 FY10 FY11

Revenue

31.4%31.0%

34.9%

29.0%

30.0%

31.0%

32.0%

33.0%

34.0%

35.0%

36.0%

FY09 FY10 FY11

Gross Margin

$0.30

$0.56

$1.55

$-

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

$1.80

FY09 FY10 FY11

Diluted EPS

4.7%

7.1%

15.6%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

FY09 FY10 FY11

Operating Margin

Q2-12Actual

Q3 FY12 Quarterly Guidance (non-GAAP)

Revenue $241.5 $235- $250

Gross margin 32.1% ~31.5%

Operating expense $53.8 ~$54

Operating profit $23.6

Operating margin 9.8% 8.5% - 10.0%

EPS $0.23 $0.20 - $0.24


Q3-12Estimate$ Millions

(except EPS)

Financial guidance for fiscal Q3FY12 is per earnings call on November 30, 2011 and is not being updated or confirmed as of any other date.

World’s Largest Supplier of Fiber Optic Components


Investment Considerations

Broadest product portfolio

Global customer base

Strong growth drivers

Market share leader with increasing share

Technology innovator

Differentiation through vertical integration

Skilled at consolidating acquisitions

Record profits with consistent annual growth

$381.3 $401.6

$497.1

$629.9

$948.8

$-

$100.0

$200.0

$300.0

$400.0

$500.0

$600.0

$700.0

$800.0

$900.0

$1,000.0

FY2007 FY2008 FY2009 FY2010 FY2011

Rev

enue

($M

)


investor relations presentation november 30,...

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