NPTN - Earnings call transcript Q3 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the NeoPhotonics 2019 Third Quarter Conference Call. This call is being webcast live on the NeoPhotonics event calendar webpage at www.neophotonics.com. This call is the property of NeoPhotonics and any recording, reproduction or transmission of this call without the express written consent of NeoPhotonics is prohibited. The webcast is available on the event calendar page of the NeoPhotonics website.

I will now turn the call over to Erica Mannionat, Sapphire Investor Relations. ahead. go Please

Erica Mannionat

are you results Thank outlook us discuss Financial me to the and and Good Eby, Beth the for third operating Chief today With XXXX. for quarter and Jenks, quarter NeoPhotonics' Chairman fourth CEO, afternoon. Officer. of joining Tim of for XXXX

providing then of third Tim discussion and drivers of review progress outlook provide results the the our the will for financial begin before fourth call will XXXX a third the in quarter business opening products. business and with for quarter quarter a for Beth and questions. of the

The performance section and to GAAP. than financial during measures being and this measures with revenue, for at These Non-GAAP unless prepared Investor filed Form Company's of amounts are statement call Non-GAAP accordance superior X-K, including management's are results substitute information, sheet certain income otherwise prepared website. today GAAP release Non-GAAP reconciliation all noted. or of press a with Company's release measures and provided in in related accordance Relations the and be and are financial and other include not a percentages statements not balance discussions and financial found to NeoPhotonics’ can press in the SEC the measures on of with financial These GAAP and

Various could levels, or and differ to which this forward-looking and call, and business NeoPhotonics, considered capital with economic of cause involve availability, inventory conference risks actual results, copyright demand, not include all product may factors the future results events. property and needs Certain uncertainties in sole contained reserved. statements projections, and the and that subsequent Material industry development, statements in is webcast historical statements customer regarding materially. rights technology be are facts,

risk filings. are and XXXX have in press of dated at in Some our described annual quarterly forth been and SEC release set factors length these OctoberXX, our

Jenks. CEO, turn over will call the Now, to Tim I

Tim Jenks

good afternoon. and Erica, you, Thank

NeoPhotonics and solutions, DCI XXXG of and coherent in $XX.Xmillion, the XX% revenue strength at the High results and We same of end end Speed prior in the demand leadership recorded quarter XX% were up strong third from progress leaders similarly from year. top increased year, the revenue, up up our the in on our outlook, leading period and markets, which continued achieved strong the same driven by customer industry, and by Metro products last driven our XX% last XX% quarter of faster partnerships with revenue in is terms from quarter products. China.

largest a largest Huawei result, our NeoPhotonics’ also and has As been customer. a years the reminder, been industry for has systems supplier as in several

from from results all U.S. Our in down from third subject revenue quarter reflect XX% products This Huawei financial is XX%, that are to EAR. XXXX. not at

We Huawei inclusion committed Entities have weathered complying with BIS Technologies’ to of on we thus remain EAR. List the headwinds the far and U.S.

again four next Our strong customers contributing XX% revenue. of performance showed

especially and continued on serving Metro footing a our markets. business those customers, has western leading Our DCI with strong

Communications Optical made to product fiber for capacity optical month last the increasing Center telecom Data of both on to in European technology, we carrying announcements Conference data and Moving applications. several related networks

C++ include Receiver. our solutions and Modulator Our Laser,

carrying to percent significantly leading solutions, spectral data the Super industry existing allow are to bandwidth their bandwidth network expand expanded full C-band, today’s installations. fiber capacity and isXX have products ranges standard and These These new of support which than configuration. which more customers

at flat have current baud state-of-the-art high XXXG, these pass of new from XXXG Gbaud capacity, These next transmission generation XX Arrayed operating filter support to capacities high channel customized single support Further, Lightwave Grating, systems and functions spacings. XXX rate, and band on we volume, Gbaud. higher high to wavelength response Waveguide platform and reliability multiplexers announced and coherent on de-multiplexers broad initial Planar shipment NeoPhotonics systems. for Based AWGs both a new coherent the high AWG the over with new networks Circuit

Inside XX DFB FR Silicon per Silicon for a enough general and sources to non-hermetic DR losses. reach mW we intrinsic of Photonics separate to XXXG the supply XX laser transceivers our announced overcome datacenter, transceivers. to laser light Photonics powerful require wavelength availability

Moreover, NeoPhotonics ideal to require open adjacent them some family these modulator our efficiently market opportunities choice are transceiver do designed for couple for making high SiPho and speed not of next high-power an term. long over packaging to DFB lasers hermetic the generation chip modules. technologies the capabilities

continued or of more ports, above of growing is year. each have driver coherent business deployment The coherent been XXXG which and our the XX% fundamental at

to We continue include We to for products ship next, through XXXG anticipate XXXZR the and expect soon will several this XXXG our years. year that this will while and continue ramp next rollouts.

and technologies, and XXXZR, XXXX, expect engaged Beyond best-in-class performance XXXG be we will we in component that and are high-speed with advanced will aligned require and high-speed strong well platforms. of XXXG presence these. our component These coexist, approaches all each capabilities in

Eby. will I that, CFO, to over call With turn our the Beth

Beth Eby

good Thank afternoon. you, and Tim,

the to range continues third metrics, with exchange, improve profitability resulted foreign combined across of profit. end The the well favorable above non-GAAP well $X.XX, in at expectations of our execute of when cash. in high of which NeoPhotonics to came quarter a midpoint EPS guidance and our all $X.XX of

on was DCI $XX.Xmillion, our of in revenue continued strength in at Metro and the markets As range China. high western end the strength mentioned, and Tim

from margin the our XX%, range X upper and end QXgross points of Non-GAAP up was at last quarter. Our

and product this sales four Other comprised fabs of, approximately fabs execution impacted were products approximately a on our about from of were points good upX just under tariff underutilization points cost of U.S. five and charges on of factories reductions. XX% laser margins continued charges Within last point by points our quarter, from in China. cost U.S. shipping our and charges of EAR; into

In higher margin. the quarter dollar gross the of to of drove was to U.S. operating driven $XX.X $X.X million. third compared $X.X a QX, gain QX, loss and expenses, the expense million, exchange million, Chinese for the revenue as quarter or relative the foreign profit approximately in Moving Yuan non-GAAP operating appreciation operating X.X%, Non-GAAP X% third of for by to expected. total was a

As our items The functional the of good temporary a that reverse gain driven the sheet rate. FX the Chinese will currency the the China is appreciates. balance this of is of revaluation Yuan quarter Yuan. as China end by to view reminder, operations We exchange news as

high to net the a As range to second for quarter quarter. the $X.XX, to our a income business a for while result, EPS compared of forecasted The loss drove end of QX. the Non-GAAP $X.XX, million of EPS in $X.XX translates the $X.XX was loss ongoing in million, of of $X.X FX $X.X additional quarter, Non-GAAP gain compared This drove EPS. the third after-tax of an at an a

quarter, For EBITDA $XX.X third the million. was adjusted

a I statement GAAP will close out of results. quarter third discussion with review my our income of the

products up year. related lack margin margin, EOL Third from XX% in related and inventory gross ban product up to X an related QX announced and last accelerated client of to certain of the in XX%, was year. to the The quarter from write-downs QX the QX increase compared points the module as quarter of increase to of was Huawei completion depreciation the in last third

that a gain million for $XX.X up in million our which third expense profit $X.X was approximately was from $X.X Russia and compensation million $X.X million, quarter of profit the sale intangibles. to prior assets of not operating quarter $XX.X included amortization QX. quarter. million, of did loss $X of preceding related expense $X.X compared in the $X.X included Operating QX million, stock-based was Net repeat expense, Operating acquisition million the from the million the period. in for a

XX% Turning the balance prior Net up restricted million $XX Inventory efficiency period approximately with continues to million $XX or higher $X revenue, operational improve. to quarter as from last days, the cash, sheet, quarter investments approximately on the improved flow million. to and $X Free was million, we finished flat was XX cash, cash in profitability. on

the Safe statements. Before of included forward-looking causing Harbor remind press would discuss with I to could discusses revenue like that affect our our differ that XXXX, Statement uncertainties filings the public materially actual future and results SEC in outlook risks fiscal quarter I of for and fourth our and the from to our everyone our release, earnings performance,

our China, selling signals end see we most to products signals activity. that tender customers from through are In global by remain positive. customers, Demand as evidenced

our customers certain in with surges China in in have the outlook. to build This their reflected and Looking risks. chain key desire believe to inventory forward west perceived mitigate supply a and/or we is deal additional to

reductions, expect expenses operating profitability, slightly annual variable to cost initial on increase in price negotiations. with of an impact grow offset by We margins With increase compensation. the

an profit, and range earnings GAAP $X.XXX. range $XX of in margin range diluted in share non-GAAP $X.XX reflective of million per for the to December expectations non-GAAP range fully quarter to Company’s XX%; margin shares. to are of of range in in to These gross diluted per approximately $X.XX the XX% the the earnings million; that, $X.XX in share million the XX%; XX.X $XXX GAAP of to numbers are; Given XX% the diluted of the gross a revenue XXXX loss

consistently changes environment, we In well have continue the of The drive we team of half necessary status executing made and U.S.-China to profitable a trade summary, continue the global and will XXXX. a drive while second monitor profitable NeoPhotonics to we macroeconomic toward to business. the is evolving

the would like for to and the comments line to formal our up questions. concludes I ask This open now operator

Operator

Instructions] we'll first from and And Simon [Operator take question Leopold James with our Associates. Raymond

Mauricio Roldan

this today. my end you you're color you also us the of about I seeing in and please several -- is you China, end inventory. looking Thank guess, trend? customers Simon taking build Beth, Can Mauricio in where to This for the but talked mentioned on western the, products customers question. sort for you customers give more

Beth Eby

been in accumulate we inventories supply, are think building it's largely has based in interested and being their cover and both analysis, products the that in to but to to on terms the demand we things just any think China, in risk customers on terms own able and/or not inventory number interest that In I expressed of large to surges customers builds -- unable inventory. being possibly that buffer date in feedback we -- supply have short. of us our Huawei a west have perceived meaningful are

Mauricio Roldan

or be to is respect inventory. western With inventory, it or hard guess, telco some I accumulate these, to DCI the And more metro? for metro, customers,

Tim Jenks

be trade. think affairs who be some use to consume normalcy, don't related to just it's the to fact end I the will reduced the have some to Mauri. return also includes both. in current But all And there unlikely the reality Tim, cases state say application. would of it trade know available we that broadly, this and is with is just it's tensions unless sense But I in capacity. of This may

Mauricio Roldan

account purchases. into somehow December take we forward that to I'm this in guidance, look particularly that fiscal year in as NeoPhotonics? 'XX, we assuming in as So the your bid we How for related quarter experiencing, these of be XXXX part demand could the are we inventory to about should think that, our expectations -- builds should expectations, you model that

Tim Jenks

think there predict but here point to Well what retain is to level can't are I resolution customers you be extent. U.S.-China the know inventory that will going there's inventory also until some We risk when of that or what, is of trade. some

Operator

take Jun Zhang Jun, is Rosenblatt We'll next Securities. live. question from our your with line

Jun Zhang

more Could for DCI on and of those the a kind what the on outlook color stress deployments and bit you the in metro, give few little U.S. us quarters? next where's

Tim Jenks

of your all question. quite hear didn't I

part first color just it? the Some what it, on, repeat Could was of Jun? you

Jun Zhang

Yes, sure.

DCI you the So the DCI, U.S. metro deployments the in market. stress the and in the mentioned

give you is just year could going all us this next is that be So and on or you view? about do inventory that, also to more sustainable this color growth into think

Tim Jenks

some So a largest to be their players relatively business of generally, view, we're steady. point serving the from and industry's of tends supply

specific affect something DCI the mix precisely is not So it's we can it does say. -- metro, and

are However, of will then is of the in inventory you first we General more a there's know, and situation there the questions, of half think view in the I indications that suggesting be than the expect half that so top year. late noted year and on as of would back the a year general the we lighter that. course set last of business the that, is bit

higher So second the offset by steady, changes in half, relatively in inventory. any

Jun Zhang

your years, a happened in two large any of market And the the all of product one the competition position Thanks. consolidation over the this also of see structure or with landscape? couple after last M&A do in you change terms also and

Tim Jenks

the Well you competitors number there who consolidated that first know, although obvious terms is larger. the in there are have and of point are competitors are of fewer quantity,

is growth strength at port rates, our us, in years, that several are has in forecasted and each segments. been market necessarily next for high-speed the that over count the and think Coherent. continued of and in part see I speeds involved a the the increasing This M&A the baud has of to those highest is have companies specific not highest so

opportunities there then again then are end use customer vendors. on of consolidate, But looking for I vendors additional they're us for a if think be to where is couple them some of going and depending an

So difference. a that make does

I think is and and and it a on, the transaction component notable when one both complete module the a working there vendor. Cisco company Acacia network consolidates equipment they're

create So more that some opportunity. may

Operator

Company. We'll Shannon take Hallum Richard our Craig with next question and from

Richard Shannon

you it suggest that as is Could are into the talked want in it soon tell? better You've stock. about normal, to go both countries next a price that too customers potential than -- bit be and inventory negotiations of does in little year? What for western China or

Beth Eby

too quarter. price of get -- in give we to up are soon the decline. XX% through fourth always it of I the It's we until tell, to historical XX% But range most

there's our of early. but behalf customers, think little this maybe year a less I pricing on little power a

Richard Shannon

Okay.

of the I numbers guide nice after gross first we know because think for going know sales the here margins? and very not them, As we you a both into you're should first a quarter, to -- don't exact perspective normal looks look to quarter obviously about probably a give from business? how that normal, the in years? the gross you does give that Is not in margin? then lot And sense than like what different what seen there's optics maybe a think but mean that for noting seasonality obviously of relative seasonality past you've

Beth Eby

and part because pricing No. price -- one I impacts the got is weeks annual of production the of two lot quarter other that out margin of of the where shorter in we've we -- is QX, major one the remember, drop of gross there's But to -- production in quarter. would just China negotiations. a got a two which environment We've the year. the every lose

So we with an end in charge up underutilization QX. usually

of part seen trend, get hope year, we part drop comes cost good gross seen so. margin we're normal and in reductions to and this that we QX and on very next the is as back that cost we Our it this still back and you've of year have We've comes do year, but over immediately reductions. working year

Richard Shannon

as last at quarters XX My more I'll you talked understand I'd jump question, of out would win Is Okay. to looks design The at far, versus Just what of that, it looks Tim, point line gigabaud. product here. maybe generation from it least last you your couple better? about any or how like And view, ones. way for to prior rate can your XXX-gig love directly so you think least good? be that hear. great Is characterize it

Tim Jenks

fact designed using that current gigabaud. And designs -- XXX-gig, rates a are there it's revenue XX both or to operate winning essentially mixed are than that toward gigabaud we've with be is, XX little to material it's certainly in said gigabaud overall. also XX%, So we're while, of the products. China been tend that deployment, wins the at older design XXX-gigabit-per-second XX about also from there's the at more for a and is matter they but XX-gigabaud perhaps data which talking then The now XXX-gig and products we've this has

This transport just certain at bandwidth, XXX-gig networks. has near is for XX immediately it moving gigabaud instead favorable for on a to the amount Then the deploy a actually of impact volume of term. to

we're doing fine wins. I the design So on think

the to very gig legs, the XXX think it's a is long in But past. has and cycle XXX-gig pace ramp. much the I similar

So I hope helps. that

Operator

our take will We from next Cowen with and Company. question Fahad Najam

Fahad Najam

please. to the Remind first ask what from revenue next some four want I classifications, customers? top the can we if was me contribution

Tim Jenks

It was, the in the next four were XX%. at customers quarter

Fahad Najam

given that customer, largest you if was the second what haven't And data?

Tim Jenks

only next give we but as the We've you first four. one, the group know, a given

Beth Eby

have But customer. another we did XX%

Fahad Najam

helpful. that's Okay,

North Now and what China rest world of us mix understand you was? America, from of the terms outside just the revenue can in just model, help the

Beth Eby

Yes.

the flat business Our at the Americas down XX%, XX%, from up the of XX%. XX% rest remained was XX%, world in China

a of locations. not This contract is end-use remember, much the customers' this story but not is locations of So there also Fahad, manufacturers.

Fahad Najam

you. thank it, Got

now my question. So to

baking on risk of build is both quarter guide inventory the your what Regarding you do a level, in comment, the for with -- built inventory inventory inventories? of us customers, at being and amount this Chinese fourth additional demand you western have can share

Beth Eby

out a of quarter of built. we Fahad, inventory number was heard you've the that and ports the about, of think every triangulation backward-looking shipped talk we do amount that on So us

So are our always indications backward-looking.

So those QX. in don't triangulations, there we think based on much was

customers it us the there's won't Our that inventory know the of telling we end how are much QX we but And don't until is. in some level quarter, know.

Fahad Najam

asking. All tried ability most thought that speeds, right, regarding the that Huawei technology highest access and been on maybe handicapped given XXX-gig, the Tim, that XXX-gigs to on. I getting it cutting-edge at China, many appreciate to it. the in has competitive ways arises most be handicaps

can't So you to and lowering where if is they're it trend backbone going associated forward to to instead that's for going of with XXX-gig a Then because all the address thinking China backbone -- kind operators are of impact that. Chinese going the we the requirement be in are Huawei, that? say how their I'd case, the accommodate any the mix seeing XXX-gig such can't about -- Huawei and what's Chinese -- margin should

Tim Jenks

have that changed Huawei some to last -- it's that of the to I in their do build. that this, systems sense deployment on can the really carriers topic relevant the a extent to questions I plans commented think China set see we

there systems it know, do that. going pushed things an tender and activity. that appropriately, for exercise on. the bandwidth. see can their provide certain We movement chain out a you they've a so some the XX-gigabaud. Beth they supply does benefit But a XX-gigabaud of other tend to And But additional of commented volume they to amount about be perhaps amount bit are fair

noted literally element XX Industry course, an three said up We additional an indirect of going their China, Wall it networks. that open are XG to the backbone loads and the that today, Info carriers the MIIT, in of reported that the in Technology And Street but national rollouts cities. Journal it's Ministry up

to some need So they're continue more going bandwidth. to

of directly ICs. supply is necessarily generally chain, not limit then, to point speaking your and their the optics. So electronic It's

know, business And from so result benefited our you fact. hope that as helps. that a has I

Operator

We'll take our Savageaux. next question from Tim

Tim Savageaux

A you went the to want think on just I couple quarter. breakout. had confirm of questions, only additional the that you one through customer I geographic XX%

Beth Eby

XX% We customers. had two

Tim Savageaux

outside mean I yes. of Huawei,

Beth Eby

One was of Huawei. which

Tim Savageaux

to visibility. So level, of been afternoon, a references this of moving there and the and back multi-year kind macro this both to have growth morning lot today,

You amount one reference port competitors made same XXX-gig growth a tremendous, also the your mentioned morning of and and activity. of tender to this did quote-unquote,

is, So happened give you multi-year all what visibility? guys to I question my has guess this simple

Tim Jenks

all, multi-year of any we've visibility, so on -- commented I think first Well don't

Tim Savageaux

talked about growing ports XXX-gig guess Well, said. you you years, is XX% specifically for what several I

Tim Jenks

Yes.

forecasts continued But projections showing industry visibility know, and ports. not growth same the are, are thing. you So coherent in

really have forecast anecdotal talked opposed companies may perhaps comments know, activity, we you that agreements. and So it's from analytics evidence may referring about this on tender see either and where to certain to morning or as be you the multi-year analysts

deployment backbone level minutes a deployment whether effect where increasing of XG interest there's provincial national in up indirect and fills how few trends commented the in continuing backbone. of a or about we just the ports. backbone of see that I its they're ago coherent networks, So macro

there's China tender, visibility. And a may amount if When more there anecdotal recall visibility isn't provincial from it's of in prior are tenders, bit but there tremendous national there a be a conversations, evidence.

hope deployments, continuing is continuing all serve. of requirements seeing open that China each our capacity question. wireless to networks is the new I to addresses we're its on what move with then carriers additional that forward and -- of backbone that of the core portends products deployment. They're the continuing So are three level to

Tim Savageaux

seeing on from commentary to up where call. It does. that activity And in in mean, did you earlier the continuum terms would reference make China on of to just anecdotal that, or visibility your to China? I quickly tender activity follow how guess you're you tender in I the characterize

Tim Jenks

see. tenders, movement less national a historical, bit Compared of the because to let's of published preponderance of the Well, is to of actual as kind tenders. the the preponderance from provincial visibility as

China We existing of additional not and any have the does that Mobile. seen with continued shift to the major are awards then systems a there installed large, much but companies certain from published isn't share equipment numbers suggest capacity it of of between and various coming information there are deployments The base.

of continuing So is trade ban, in China. roll spite the business to in

Tim Savageaux

in specifically if rest And do and change it of of world. amounts any -- look at talking you sequentially, you at you you yes, looked least China your it. where I in in saw the -- QX just what of kind guide, Got QX equal the between absolute see revenue dollar growth saw guess like

As you of or forward bias in oh, you expect there terms growth? QX is in you terms that customers of what drive to geographies know, any to look

Beth Eby

it to be We about in level QX. expect

Tim Savageaux

Okay.

I similar, guess? So

Beth Eby

Yes.

Tim Jenks

Yes, similar.

Tim Savageaux

QX, great. To

Tim Jenks

proportional yes. east know, versus Similar level, and on you Yes. west, a

Tim Savageaux

gig, consider XXX level opportunity, some XXX volumes Is me now, that or in into material ECOC, would and you the or at that announcements maybe general, about context Company a respond or for to the for you how silicon the of around talked that I when expect photonics there. laser there's think can be the overlap product would I yet of terms that you you look case? you as for one at maybe guess and the center this mentioned opportunity some you'd out last in intra-data of in And coming to

Tim Jenks

Yes.

that photonics-based here the are DR referred the from laser silicon that we're transceivers. products and So prepared referring starting talking to what about particular, I remarks, in in we're announcement used is to in FR

rate have that's the small. as those stay such the the time silicon of a And going on so I to which be think of case story, ramps. transceivers And deployment forecasted become it's actually main revenue, basis they lots steep for still to yet. photonics-based done. until relatively percentage But need several material and activity, needle-mover, know, of of quarters And yet there's a not it lots interest, we you

Operator

Michael take will Genovese with MKM next Partners. our We question from

Michael Genovese

quarter Can I that. I missed the get in just again? the Huawei percentage

Tim Jenks

Sure.

Beth Eby

XX%.

Tim Jenks

prepared and that XX% number, said XXXX the from we in was down was remarks was Huawei the full-year XX%.

So we're was we're down XX%, XX%. last year now from running about it

Michael Genovese

I questions -- touch think my kind on of

Tim Jenks

Just a correction, It was Mike. XX%.

Beth Eby

In XXXX.

Tim Jenks

mistake. In XXXX. My

Sorry.

Michael Genovese

Okay. some probably going Thank time you're questions, we've what quarter that been would last differently you. to slightly pretty ask would what's are be now, being about, gotten good things this talking inventory on quarter, any sequentially. strengthening expecting? build? you And you you had give I'm how does that that the about visibility wondering, -- suggested things the some change much flat better, of better that how build And reported much quarter is that actually of themes detail -- up. Xth the the you is the other when the and And you at helpful. be guiding could I'm of and you're outside inventory

Tim Jenks

a it to we for bit then in interested do actually is us some remarks. it customers we more, a being to asking as talked this know, inventory. also you about Well did of We potential similar, and see our prepared why but see extent bit key for in

quantify can't at So moment. you have is a difference, view. that a further Maybe you know, We that it proves the over important. fully be might there out Beth, risk time to

Beth Eby

just able know what -- inventory earlier, but know have quarter I until would I that said think to don't strong. an I'll because been is I would Well, remained have to thought that some after use over -- I Huawei demand I think the as already, don't example. build they They we

we protect demand surges know of in is don't the want demand. some an inventory reason really increase in to against build So of is this to customers what because part

until after what inventory really versus was fact through So of know sold the we're buffer. what's don't in demand we

Michael Genovese

inventory with to we're I to I what talking geopolitical that customers, they clarify building That's concerned that surges? you're the but Or this to also tensions, or of some is Okay. sort about about inventory sure building are trade or of U.S. sounds build. North Chinese make inventory helpful, tensions It and just also of trade want this me, customers saying be would demand want because American And the or because that the are western sorry. tensions? of customers, right,

Beth Eby

potential surges. if potential Again, conversations. of it's certain other demand are because extra this risk buy all geopolitical supply is surges going chain anecdotal It's demand inventory perceived or I to customers, of parts. think tensions,

Michael Genovese

to comfort sounds don't are customers Right. knowing is guys about you optical inventory building the this that this this right. about -- below mean, you this? people that just level ask because But you out then in your in that my think good a building -- bad time, where memories, -- to comfortable a with because that build industry you inventory a in or question sounds of of at this sound comfortable going brings But bad up get lot And just we this conference sort Are we'll and quarters, couple been want has we'll of what's call with revenues you happen? well one, that like of confident are last maybe inventory, are be at would on or worried inventory type I there. -- point I something how of reason are the now you

Tim Jenks

we Mike, in know, we it's I neighborhood a wrong the you you to it with know, have it. But the time And live say that have Well we and comfort know memory. in. long would live be you

we what what be then the much is magnitude, and and try is might the time. we and try effect So on do over get a handle what how

there then will use if is as it. earlier, said we So at again, some they level inventory point some of

chain they're And supply trade and so, trade tension on to U.S. supply comfortable large trade tensions. can supply be Chinese indirectly know, change. -- unless for policy concerns suddenly of partners, to you either level Essentially, that the say some we or is this our and related with there's U.S. -- customers now won't settlement also chain that causes

choice. a have we so And

to or is choose we not generally supply choice to supply, Our supply. and

Operator

take our question Instructions] Diffely. [Operator from Tom We'll next

Thomas Diffely

hoping little in could you what you're little a color. was Hoping us to seeing point. of Huawei give at a outside on of China this bit get I color

Tim Jenks

Well the there. that's meaningful expressed equipment are U.S.-China Nokia principal of were of Shanghai not three whether all set and calls concern national or ZTE with we in also on important that Mobile, Unicom in rely varying Telecom general, ZTE at ours you there Fiberhome know, a of when manufacturers. -- the Bell, are share outside the on us, there's and Huawei, being at an or principal shift. entities carriers, been the prior Fiberhome customers have Huawei and China has conference China Alcatel network trade, constant And listings, levels. And to perturbations generally been customer has China

from number, suggested And a each historical share network tender view the breakdown a ports. business -- do are to bit we XX% Mobile our they see got going of really the no material award numbers the between share the shifts relatively recently Huawei total change equipment know was a companies on. tender awards about important we're but I if this commented some there to little used earlier, it's won of China actually in to. the small It that about and in published being Tom, where from

And domestic hand market. within Chinese share they're really other to material unable network today. so see holding make it one they gains but they're how on -- That's Huawei, their the we own, than the equipment and companies are

Thomas Diffely

mention inventory that Huawei? from you had an write-down earlier you did then And

Beth Eby

Huawei-specific a inventory was had million $X.X we QX EAR write-down that product. In of inventory

Thomas Diffely

supply price a agreements Okay. declines And trend versus you contracts or longer price are then built-in finally annual towards longer the negotiation? seeing with

Tim Jenks

in with how the yes. than put a more a that, operate normal and current not to is, might customers And the I necessarily neighborhood, they able, affairs the world perhaps, realization on couple then companies flex to know, state this world, less to competitive end we them, But systems as viewed largest -- looking you the of the subject have normal. they're short answer normal. of the effectively to for is under And both customers listing, is up Huawei, color you the entities variations think on previously the But of if is You the is Chinese. other and new are therefore on the little muscle because largest procurement are their a they in theme. most around always what

you're supply And what opposed in short, really referring really a what they're quote-unquote, interested securing fixed as supply price agreement they're here. People reductions, having in that supply is securing -- might their reductions are, built I beat for with price in with planned than to about rather their cost consolidation that's what interrupt suppliers think they than to had having, interested to long-term in, what reductions worrying rather or on. in chain either up cost

from we're these dynamics I alternatives to. used some the think that open So what are of

Operator

today's Tim for question-and-answer This over to concludes Mr. Jenks will closing session. I call turn remarks. the now

Tim Jenks

future. our Happy to Thank you We progress in and very our suppliers, everyone much of the the and look employees updating and for interest work our NeoPhotonics. to Halloween. on time in forward you we your diligent appreciate

Operator

and and may you this Ladies today's gentlemen, now teleconference disconnect. concludes

Neophotonics (NPTN) 1 Nov 192019 Q3 Earnings call transcript