Shares of fiber-optics makers like JDS Uniphase (JDSU) tumbled Wednesday morning as gloomy guidance from rival Finisar (FNSR) spooked the industry.

Sunnyvale, Calif.-based Finisar plummeted nearly 40% a day after saying it expects EPS of just 31 to 35 cents on sales of $235 million to $250 million for its fiscal fourth quarter. Analysts had been calling for much stronger EPS of 48 cents on sales of $268.6 million.

Finisar placed the blame on conditions in China, where price negotiations with telecom customers and a 10-day long shutdown for the Chinese New Year led to an unexpected inventory pile-up.

The weak outlook overshadowed Finisar’s stronger-than-expected fiscal third-quarter sales of $263 million and in-line earnings of 47 cents a share.

The pain was felt by other fiber-optics companies, including JDS Uniphase, which retreated 13% from a 5-year high to $22.08.  Oclaro (OCLR) tumbled 17% and Ciena (CIEN) lost 5%.

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