Viavi Solutions reported preliminary results today that fell short of its guidance on revenue, and cited a drop-off in research and development spending by network equipment manufacturers and semiconductor companies as the driver.
Viavi said that its revenues for its fiscal third quarter are expected to be between $246-$248 million, compared to guidance of $256-276 million. That lower figure was mostly driven by weaker than expected performance in its Network and Service Enablement (NSE) segment—specifically, lower demand for lab R&D products, Viavi said. The company’s Optical Security and Performance (OSP) segment figures are in line with guidance, according to the company.
“The pullback in R&D spend at network equipment manufacturers (NEMs) and semiconductor companies was much higher than anticipated leading to revenue and non-GAAP operating margin coming in below the lower end of our guidance” said Oleg Khaykin, president and CEO of Viavi Solutions, in a statement. “The spending conservatism and rapid slowdown that we saw in the Service Provider and Data Center spend at the end of fiscal first quarter is now percolating down to the system and component suppliers.”
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Khaykin added, “The rest of the NSE business came in-line with our original expectations. We continue to see stabilization of demand for our field instruments. Our OSP business segment revenue was also within our initial expected range. Our previously announced cost reduction measures are progressing on schedule, and we expect them to be substantially complete by end of this fiscal year.”
Viavi will hold its earnings call on May 2 at 1:30 p.m. PT.