Viavi Solutions CEO Oleg Khaykin has revealed that the test and measurement company will target 5G network testing business as the RF field instruments provider in addition to its fiber and copper products.
“5G will drive incremental spend in calendar 2019 from the 5G wireless service providers. We are also seeing the beginning of the ramp among the mobile phone manufacturers and although it’s very small,” Oleg Khaykin said.
Viavi Solutions is not targeting 5G smartphone manufacturing companies in the initial phase of 5G evolution. T&M companies such as Keysight, Rohde & Schwarz and National Instruments play in chip design or the board design stages.
Viavi Solutions will be working with big OEMs who design and build base station and radios for 5G equipment.
“We provide large test systems to emulate the 5G network around their product and test their product at a system level. We also provide products for field testing for the service providers in their labs where they put in multiple OEM products and then they test in a simulated environment and validate it,” Oleg Khaykin said.
Viavi Solutions’ CellAdvisor 5G will position the company as the RF field instrument provider to telecom operators who are deploying 5G networks. During this stage, OEMs will enhance the production of 5G equipment.
Viavi Solutions is generating a big chunk of the revenue from 4G and LTE software upgrades to the existing system as well as the new 5G system shipping.
Viavi Solutions revenue rose 49.4 percent to $306.9 million in Q2 of fiscal 2018-19. Revenue from NSE (Network and Service Enablement) at $223.7 million (+42.3 percent) was driven by the Network Enablement business segment with strength in wireless as well as lab and production business.
A recovery in North American carrier spending, demand for 5G test equipment and strong demand for 100 and 400 gigabit Ethernet lab and production test equipment were the drivers behind the strong NSE revenue in Q2.
OSP (Optical Security and Performance Products) revenue at $83.2 million (+72.6 percent) reflected solid demand in anti-counterfeiting bank note business.
VIAVI’s operating margin at a record 20.8 percent exceeded the high-end of our guidance and expanded 690 basis points year-on-year as a result of higher revenue combined with a significant operating leverage in our cost structure. EPS at $0.22, which is a new quarterly record exceeded the high-end of the guidance and more than doubled from a year ago levels of $0.10.
Amar Maletira, chief financial officer of Viavi Solutions, said: “This was a result of inorganic growth from our acquired businesses and a solid growth in our lab and production fiber and optical test business.”
The company expects fiscal third quarter 2019 revenue of $257 million with operating margin of 13 percent. Viavi is targeting NSE revenue of $200 million and OSP revenue of $57 million.