Finisar Corp ( FNSR - Free Report) , a Zacks Rank # 5 (Strong Sell), is a provider of fiber optic subsystems and network test and monitoring systems which enable high-speed data communications over local area networks, or LANs, storage area networks, or SANs, and metropolitan access networks, or MANs. They are focused on the application of digital fiber optics to provide a line of high-performance, reliable, value-added optical subsystems for data networking and storage equipment manufacturers. Recent Earnings The company recently reported Q1 18 earnings where they missed the Zacks consensus earnings estimate, but just beat the Zacks consensus revenue estimate. On a sequential basis the company saw declines in revenues -4.4%, gross margins -1.3%, operating income -26.8%, operating margins -2.6%, and net income -84.8%. At the same time operating expenses grew by +1.3%. Due to a few headwinds, management decreased Q2 18 guidance from about $359 million to a range of $322-342 million. Issues Facing the Company The main reason for the decrease in revenue guidance is their 3D Sensing segment. Their expectations have been pushed out one quarter due to manufacturing process changes. The company also saw their sales of telecom products fall by -8.1% compared to the last quarter, but this was expected to some degree. Lastly, the increase in operating expenses were not offset by 3D sensing revenue due to the pushout till next quarter. Management’s Take According to Jerry Rawls, CEO, “ We experienced strong demand in our first fiscal quarter for our 100G QSFP28 transceivers for datacenter applications. However, our overall revenues for our first fiscal quarter were $341.8 million, a decrease of $15.7 million, or 4.4%, compared to the fourth quarter of fiscal 2017. This decrease resulted primarily from a decline in telecom revenues as well as a decrease in 10G and below datacom transceivers.” Price and Earnings Consensus Graph Due to the delays in their 3D Sensing segment, increased costs, and the decline in their telecom sector, the stock price and future earnings estimates have decline as you can see below.