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ICCSZ News (Compile: Nina) On Monday, NeoPhotonics (NYSE: NPTN), a leading designer and manufacturer of high-speed communications network optoelectronic solutions for telecom and data center applications, announced its preliminary results for the fourth quarter, reflecting Some recent developments in the company include the end of life of certain client transceiver modules, a legal settlement, and the final agreement to sell Russian manufacturing operations.
NeoPhotonics has announced the end of life of certain client transceiver modules, so the production and sales of these products will be discontinued after the last production is completed until May 2019. This will result in approximately $3.5 million in inventory and asset write-in costs for the fourth quarter of 2018, and approximately $3 million in accelerated depreciation, which will be amortized in the first production in the first and second quarters of 2019. In 2018, this product contributed approximately $10 million to NeoPhotonics' revenue.
In addition, NeoPhotonics has reached an agreement with Lestina International to settle its lawsuit in cash for $2.2 million. This fee will be confirmed in the fourth quarter of 2018. As disclosed in NeoPhotonics' recent 10-Q document, the lawsuit is in compliance with the purchase commitments for product asset-related materials sold to APAT Optoelectronics Co., Ltd. by a foreign subsidiary of NeoPhotonics in January 2017.
NeoPhotonics also signed a definitive agreement to sell its manufacturing operations in Russia at approximately book value. This is consistent with the financial data disclosed in the company's 10Q filing as of September 30, 2018.
Taking into account the above factors, NeoPhotonics initially expects sales revenue in the fourth quarter of 2018 to be between $90 and 92 million, which was previously expected to be between $87 million and $92 million. Gross margin will be between 24% and 25%, previously expected to be between 22% and 26%, non-GAAP gross margin will be between 27% and 29%, previously expected to be between 24% and 28%.
Tim Jenks, Chairman and CEO of NeoPhotonics, said: "From a company perspective, we remain committed to our core competencies, including our industry-leading coherent devices and solutions for data center interconnects and telecommunications systems. Completing our transition from client network application modules to component-level solutions and focusing on the more profitable 400G to 1T single-wavelength platform, where our advanced hybrid photonic integration technology delivers the highest value.