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VIAV, Viavi Solutions Inc.

Semiconductors asset-light CyclicalSerial acquirer

Viavi Solutions Inc. is a global provider of network test, monitoring and assurance solutions for telecommunications, cloud, enterprises, first responders, military, aerospace and critical infrastructure.

VIAVI is also a leader in optical processing technologies for anti-counterfeiting, 3D sensing, aerospace, automotive and industrial applications.

To serve our markets, we operate the following business segments: Network and Service Enablement (NSE); and Optical Security and Performance Products (OSP).

Latest annual: FY2025 10-K

VIAV · Viavi Solutions Inc.

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2025

$1.1B

+8.4% YoY · −1% 5-yr CAGR

Vital signs · TTM, with 5-yr average

Revenue $1.4B 5-yr avg $1.1B

Gross margin 57% 5-yr avg 58%

Operating margin 4.3% 5-yr avg 8.2%

Owner-earnings margin 3% 5-yr avg 10%

Free cash flow margin 3% 5-yr avg 9%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

What it is: Revenue is Products (84%) and Services (16%).
Situation: Cyclical. Margins collapse and recover repeatedly across the record; a single year, good or bad, misstates the through-cycle earning power. Serial acquirer. Goodwill and acquired intangibles are 36% of assets, with meaningful acquisition spending in 4 of the record's 10 years; much of what this business is was bought, at prices the record carries.
What moves the needle: Gross margin has run about 58% and operating margin about 5.3% through the cycle, a wide spread between price and the cost of what it sells — whether that advantage is durable pricing power or a margin that can erode is the question the record is for. The operating margin has swung widely — from −9.3% to 14% — on a steadier 58% gross margin, so what moves it sits below the gross line, in operating spend and one-off charges more than in the cost of the product itself. Read this kind of business on process leadership and the capex cycle. On its own account, the filing leans hardest on pricing power & competition, set against the numbers in what the filing emphasizes, below.
Is it a good business?: Return on capital has rarely cleared the cost of capital (median 5%, above 15% in 1 of 8 years). The steadier read is owner earnings: roughly 8% of revenue reaches owners as cash, consistently. The cycle and the balance sheet decide this one; the worst year tells more than the median, and the rest is in the 10-K.

Every line is arithmetic on the company's filings, shown in full in the sections below.

Where the money comes from

read the 10-K →

Products is 84% of revenue, with Services the other meaningful line at 16%.

Revenue by product line, FY2025

Products84%$912M
Services16%$172M

From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.

The record

Ten years of arithmetic, read across the cycle.

The record, 2016–2025

realized figures from each filing · older years to the left

2016’16	2017’17	2018’18	2019’19	2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	TTMTTMMar 2026
											Income statement
$906M	$805M	$876M	$1.1B	$1.1B	$1.2B	$1.3B	$1.1B	$1.0B	$1.1B	$1.4B	RevenueRevenue
61%	60%	56%	58%	59%	60%	60%	58%	58%	57%	57%	Gross marginGross mgn
39%	37%	37%	30%	28%	28%	28%	30%	33%	32%	32%	SG&A / revenueSG&A/rev
18%	17%	15%	17%	17%	17%	16%	19%	20%	19%	18%	R&D / revenueR&D/rev
($84M)	$7M	$2M	$67M	$118M	$142M	$185M	$82M	$21M	$58M	$59M	Operating incomeOp. inc.
−9.3%	0.9%	0.2%	6.0%	10.4%	11.9%	14.3%	7.4%	2.1%	5.3%	4.3%	Operating marginOp. mgn
($99M)	$160M	($49M)	$5M	$49M	$68M	$16M	$26M	($26M)	$35M	($55M)	Net incomeNet inc.
—	12%	—	—	57%	48%	—	58%	—	11%	—	Effective tax rateTax rate
											Cash flow & returns
$64M	$94M	$66M	$139M	$136M	$243M	$178M	$114M	$116M	$90M	$71M	Operating cash flowOp. cash
$38M	$29M	$36M	$40M	$40M	$36M	$36M	$36M	$39M	$38M	$40M	DepreciationDeprec.
$81M	($129M)	$48M	$56M	$2M	$92M	$75M	$1M	$54M	($37M)	$33M	Working capital & otherWC & other
$36M	$39M	$43M	$45M	$32M	$52M	$73M	$51M	$20M	$28M	$26M	CapexCapex
3.9%	4.8%	4.9%	4.0%	2.8%	4.3%	5.6%	4.6%	1.9%	2.6%	1.9%	Capex / revenueCapex/rev
$29M	$65M	$24M	$94M	$104M	$208M	$142M	$78M	$97M	$62M	$46M	Owner earningsOwner earn.
3.2%	8.1%	2.7%	8.3%	9.1%	17.3%	11.0%	7.0%	9.7%	5.7%	3.3%	Owner earnings marginOE mgn
$29M	$56M	$24M	$94M	$104M	$191M	$106M	$63M	$97M	$62M	$46M	Free cash flowFCF
3.2%	6.9%	2.7%	8.3%	9.1%	15.9%	8.2%	5.7%	9.7%	5.7%	3.3%	Free cash flow marginFCF mgn
$900K	$0	$510M	$47M	$3M	$700K	$8M	$67M	$0	$121M	$402M	AcquisitionsAcquis.
$45M	$92M	$41M	$11M	$44M	$42M	$236M	$84M	$20M	$16M	—	BuybacksBuybacks
-8%	1%	—	5%	8%	25%	—	5%	1%	7%	—	ROICROIC
-14%	20%	-7%	1%	8%	9%	2%	4%	-4%	4%	-7%	Return on equityROE
−14%	20%	−7%	1%	8%	9%	2%	4%	−4%	4%	−7%	Retained to equityRetained/eq
											Balance sheet
$968M	$1.4B	$781M	$523M	$541M	$699M	$561M	$521M	$491M	$425M	$501M	Cash & investmentsCash+inv
$148M	$120M	$219M	$238M	$236M	$257M	$261M	$231M	$213M	$261M	$320M	ReceivablesReceiv.
$51M	$48M	$92M	$103M	$83M	$95M	$110M	$116M	$97M	$118M	$148M	InventoryInvent.
$47M	$33M	$56M	$63M	$53M	$63M	$58M	$47M	$50M	$69M	$82M	Accounts payablePayables
$153M	$136M	$255M	$277M	$266M	$288M	$313M	$300M	$259M	$310M	$387M	Operating working capitalOper. WC
$1.2B	$1.7B	$1.2B	$917M	$914M	$1.1B	$1.0B	$945M	$877M	$885M	$1.1B	Current assetsCur. assets
$226M	$229M	$553M	$284M	$233M	$747M	$369M	$344M	$247M	$590M	$653M	Current liabilitiesCur. liab.
5.4×	7.3×	2.1×	3.2×	3.9×	1.5×	2.7×	2.8×	3.5×	1.5×	1.6×	Current ratioCurr. ratio
$152M	$152M	$336M	$381M	$381M	$397M	$388M	$455M	$453M	$596M	$702M	GoodwillGoodwill
$1.7B	$2.1B	$2.0B	$1.8B	$1.8B	$2.0B	$1.8B	$1.9B	$1.7B	$2.0B	$2.5B	Total assetsAssets
$583M	$931M	$558M	$579M	$601M	$224M	$617M	$630M	$636M	$396M	$1.1B	Total debtDebt
($384M)	($505M)	($223M)	$56M	$60M	($475M)	$55M	$108M	$145M	($29M)	$580M	Net debt / (cash)Net debt
-2.4×	0.2×	0.0×	2.0×	8.8×	9.7×	7.9×	3.0×	0.7×	1.9×	1.3×	Interest coverageInt. cov.
$689M	$804M	$735M	$627M	$633M	$764M	$672M	$691M	$682M	$780M	$847M	Shareholders’ equityEquity
4.9%	4.1%	3.5%	3.4%	3.9%	4.0%	4.0%	4.6%	4.9%	4.9%	3.9%	Stock comp / revenueSBC/rev
											Per share
234M	235M	227M	231M	235M	236M	238M	227M	223M	226M	226M	Shares out (diluted)Shares
$3.87	$3.43	$3.86	$4.89	$4.84	$5.07	$5.43	$4.88	$4.49	$4.80	$6.04	Revenue / shareRev/sh
$-0.42	$0.68	$-0.21	$0.02	$0.21	$0.29	$0.07	$0.11	$-0.12	$0.15	$-0.24	EPS (diluted)EPS
$0.12	$0.28	$0.10	$0.41	$0.44	$0.88	$0.60	$0.34	$0.44	$0.27	$0.20	Owner earnings / shareOE/sh
$0.12	$0.24	$0.10	$0.41	$0.44	$0.81	$0.44	$0.28	$0.44	$0.27	$0.20	Free cash flow / shareFCF/sh
$0.15	$0.16	$0.19	$0.19	$0.14	$0.22	$0.30	$0.23	$0.09	$0.12	$0.11	Cap. spending / shareCapex/sh
$2.95	$3.43	$3.24	$2.71	$2.70	$3.23	$2.82	$3.05	$3.06	$3.46	$3.74	Book value / shareBVPS

Per-share growththe realized rate an owner's share compounded

	9-yr	5-yr
Revenue / share	+2.4%/yr	−0.1%/yr
Owner earnings / share	+9.3%/yr	−9.1%/yr
EPS	—	−5.9%/yr
Capital spending / share	−2.3%/yr	−1.9%/yr
Book value / share	+1.8%/yr	+5.1%/yr

The year, in the company's words

the filing →

Verbatim from the 10-K's management discussion. Each sentence is shown only because its subject, direction, and stated figures check out against the filed numbers on this page. The words are the company's; the arithmetic is the record's.

Revenue+8.4%
“Net revenue increased $83.9 million, or 8.4%, during fiscal 2025 when compared to fiscal 2024. This increase was primarily from the data center ecosystem for field, lab and production products for fiber and data center buildouts, as well as growth in our aerospace and defense products ($25.2 million contributed by our acquisition of Inertial Labs), which was partially offset by a decline in spend by NEMs and service providers for wireless and cable products.”
✓ figure matches the filed record

The record, charted

FY2016–2025

Each measure over its full record; the current point and the worst year marked.

Share count

226Mpeak FY2022

ROIC

7%low FY2016

Gross margin

57%low FY2018

Net debt ÷ owner earnings

-0.5×peak FY2024

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

$62Mowner earningsvs.$35Mnet incomelow FY2018

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetainedBeyond op. cash

Each year's outlays against its operating cash: the mix, and how it drifts. The hatched cap is spending beyond that year's operating cash — financed from the balance sheet or borrowing, not operations.

FY2016FY2025

Owner-earnings bridge

FY2021–FY2025cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2025 the business turned $35M of profit into $62M of owner earnings: more cash than the profit line showed, after the non-cash charges and the capital it put back in.

Reported net income$35M

Owner earnings$62M · 6% of revenue

	FY2025	FY2024	FY2023	FY2022	FY2021
Reported net income	$35M	($26M)	$26M	$16M	$68M
Depreciation & amortizationnon-cash charge added back	+$38M	+$39M	+$36M	+$36M	+$36M
Stock-based compensationreal costnon-cash, but a real cost	+$53M	+$49M	+$51M	+$52M	+$48M
Working capital & othertiming of cash in and out, other non-cash items	−$37M	+$54M	+$1M	+$75M	+$92M
Cash from operations	$90M	$116M	$114M	$178M	$243M
Maintenance capital expenditurethe spending needed just to hold position and volume	−$28M	−$20M	−$36M	−$36M	−$36M
Owner earnings	$62M	$97M	$78M	$142M	$208M
Growth capital expenditurediscretionary; spent to get bigger, not to stand still	—	—	−$15M	−$37M	−$16M
Free cash flow	$62M	$97M	$63M	$106M	$191M
Owner-earnings marginowner earnings ÷ revenue	6%	10%	7%	11%	17%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the capital it must spend to hold its position . The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $53M), owner earnings is nearer $9M.

Much of fiscal 2025's profit didn't arrive as operating cash; it sits in “working capital & other” above. That can be a real inventory or timing swing, or profit that doesn't run through operating cash at all: a heavy tax year, equity-method earnings, or investment income booked through investing. For a year like this, owner earnings understates the cash earned; the full cash-flow statement carries the rest.

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2025 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? 1.9×

Thin

Operating income $58M ÷ interest expense $30M

What this means
Operating profit covers interest, but with little room. A bad year, a refinancing at higher rates, or a revenue wobble closes the gap fast.
How heavy is the debt, net of cash? +$29M

Net cash

Cash $424M + ST investments $2M − debt $396M

What this means
Cash and short-term investments exceed every dollar of debt by $29M, on net the company owes nothing, and can act from strength when others can't. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? 127d

Long (60+ days)

DSO 88 + DIO 93 − DPO 54 days

What this means
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.

Is it a good business?

Return on invested capital 5%

Below average through the cycle

8-yr median, range -8%–25%; 7% latest = NOPAT $51M ÷ invested capital $753M

Industry peers: median 9%

What this means
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 8 years (it ran 7% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
Owner-earnings margin 8%

Solid through the cycle

10-yr median margin, range 3%–17%; latest $62M = operating cash $90M − maintenance capex $28M

Industry peers: median 12%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 6% of revenue this year, a 8% median across 10 years. Treating stock comp as the real expense it is (less $53M of SBC) leaves $9M.
Are earnings backed by cash? 2.58×

Cash-backed

Cash from ops $90M ÷ net income $35M

In the filing’s words The filing leans on adjusted, non-GAAP earnings, but the GAAP profit is itself cash-backed — the adjustments are not papering over a cash shortfall here.

What this means
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

Where do the earnings go? 26%

Reinvests most of it

Dividends + buybacks $16M ÷ Owner Earnings $62M

What this means
Of $62M Owner Earnings, $16M (26%) went back to shareholders, $0 dividends, $16M buybacks. But the buybacks barely exceed stock issued to employees ($53M SBC), net of dilution, little was truly returned. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
Investing or harvesting? 0.72×

Harvesting

Capex $28M ÷ depreciation $38M

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 1 of 6 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Near

Revenue ≥ $2B · $1.1B

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Near

Current ratio ≥ 2× · 1.50×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Conservative debt Near

Debt ≤ working capital · $396M vs $296M WC

What this means
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
Earnings stability Miss

A profit every year (10-yr record) · 3 loss years

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Miss

Uninterrupted dividends · none paid

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth Pass

Earnings +33% over the record · +178%

What this means
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $0.05/share (latest year $0.15), the averaged base the calculator's gate runs on, and book value is $3.34/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2016–2025

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 7 of 10

What this means
Lost money in 3 year(s), look at what happened there before trusting the average.
Return on capital ≥ 15% 1 of 10 yrs

What this means
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
Operating margin −3% → 5% (3-yr avg ends)

In the filing’s words The record and the words agree: the margin widened and the filing attributes the gain to its own pricing, not volume alone.

What this means
Through the cycle the operating margin widened — about −3% early to 5% lately, median 5% — pricing power intact or improving.
Reinvestment, incremental ROIC returns capital

What this means
The capital base barely grew: this business returns cash through dividends and buybacks rather than reinvesting. Judge it on the cash returned, not on compounding.
Owner earnings growth +6%/yr

What this means
Owner earnings grew about 6% a year over the record.
Worst year 2016 · −9.3% op. margin

What this means
Operations went underwater in 2016, understand why before trusting the good years.
Share count −0.4%/yr

What this means
Roughly flat share count, little dilution, little buyback.

Does AI threaten the moat?

Low contestability

The moat is physical, regulated or balance-sheet-funded, the kind AI cuts costs within but does not contest.

In its own filing Named as a competitive risk

Its FY2025 10-K names artificial intelligence as a competitive threat.

“The use of open-source software and generative artificial intelligence may expose us to risks and harm our intellectual property position.”

AI is unlikely to contest a moat that is physical, regulated or balance-sheet-funded; here it reads more as a cost tool than a threat, and the company is using it that way.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of the latest quarter, Mar 28, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$1.1B

Cash & short-term investments$501M
Receivables$320M
Inventory$148M
Other current assets$85M

Current liabilities$653M

Debt due within a year$245M
Accounts payable$82M
Other current liabilities$326M

Current ratio1.61×all current assets ÷ what's due · Graham looked for 2×

Quick ratio1.39×stricter: inventory excluded

Cash ratio0.77×strictest: cash alone against what's due

Working capital$401Mthe cushion left after near-term bills

Debt due this year vs. cash$245M due · $501M cash covered by cash on hand, no refinancing forced · both figures from the Mar 28, 2026 balance sheet

Revenue, latest quarter vs. a year ago+42.8%the freshest read on whether the business is still growing

Current ratio, recent quarters3.5× → 1.6×

Deeper floors

Tangible book value($253M)equity stripped of goodwill & intangibles

Net current asset value($628M)Graham's net-net: current assets less all liabilities

Debt incl. operating leases$1.1B$42M of it operating leases

Deferred revenue$122Mcustomer cash collected before delivery; operating float

From the company's latest filing.

How the cash was used, 2016–2025

Over the record, the business generated $1.2B of operating cash; how management split it reads as a balanced allocator, splitting cash between the business, owners, and the balance sheet.

Reinvested$417M · 34%
Buybacks$631M · 51%
Retained (debt / cash)$193M · 16%

Returned to owners$631M
70% of the owner earnings the business produced over the span, $0 as dividends and $631M as buybacks.
Source of fundingOperating cash
Operating cash covered reinvestment and returns; over the span debt rose $498M and cash and short-term investments fell $467M.
Average price paid for buybacks$12.82
Across the years where the filing reports a share count, 39M shares were bought for $495M, about $12.82 each. Year to year the price paid ranged from $8.20 (2025) to $15.94 (2022), and 2022, near the top of that range, was also its heaviest buyback year ($236M).
Net change in share count−3.3%
The diluted count fell from 234M to 226M, so the buybacks outran the stock issued to staff.
Dividend record—
No dividend line was reported in the filing data over the span; the record here neither confirms nor rules out a payout.

Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.

Acquisitions & goodwill

from the balance sheet & the 10-year cash-flow record

Goodwill grows only when a company acquires and falls only when it concedes it overpaid. The size of that bet, the cash put into buying rather than building, and how much has already been written off.

Goodwill & intangibles$727M36% of all assets; the premium carried on the balance sheet for businesses acquired

Against book equity76%goodwill is this share of book equity; the rest is the company’s own retained and paid-in capital

Cash spent acquiring$758Mover 10 years buying other businesses, against $417M of capital spent building

$91M written down across 1 year (2016): goodwill the company has already conceded it overpaid for, charged against earnings. A write-down costs no cash (the cash went out when the deal was signed), but it is management marking its own past judgment to market.

Goodwill, acquired intangibles and equity from the latest balance sheet; acquisition spend and write-downs summed across the 10-year record, from the company's own filings.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.

Fiscal year	Chief executive	Pay, as filed	“Actually paid”	Owner earnings
2021	Oleg Khaykin	$16.9M	$20.2M	$208M
2022	Oleg Khaykin	$9.3M	$2.5M	$142M
2023	Oleg Khaykin	$9.0M	$5.3M	$78M
2024	Oleg Khaykin	$8.3M	−$1.5M	$97M
2025	Oleg Khaykin	$10.6M	$16.4M	$62M

Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Owner earnings are the whole business's, from the record above, for the same fiscal years.

Insider ownership1.8%
The stake all directors and executive officers hold together, per the 2025 proxy: skin in the game, the first thing Munger reads.
CEO pay ratio106:1
What the chief earns for every dollar the median employee makes, per the 2025 proxy. A high ratio alone settles nothing; some businesses are genuinely top-heavy in scarce skill. A runaway figure is where Buffett starts asking whether the board is doing its job.
Stock-based compensation$53M
The slice of the business handed to employees in shares this year, 5% of revenue, equal to 92% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.

Inverting the record

Invert: instead of why Viavi Solutions Inc. is a good business, the question is what would make owning it a mistake, and whether those marks are in the record. Disconfirming tests across 2016–2025.

1 of the 6 tests turned up something to look into; the other 5 came back clean.

Look hereDid receivables and inventory outpace sales?22% → 34% of sales
Receivables and inventory grew from $200M to $468M while revenue grew 51%: working capital is climbing faster than sales (22% of revenue then, 34% now). That can mean customers paying slower, stock building up, or revenue pulled forward. The filing's cash-flow and receivables notes say which.

And these came back clean

Is it less profitable than it was?
Did the share count rise anyway?
Did debt outgrow the business?
Did reported profit become cash?
Are "one-time" charges a yearly habit?

Each test is read from the filings and is noisy alone; a flag can mark a cyclical trough or a year of heavy investment as easily as a problem. The filing says which.

What an owner would ask, FY2025

read the 10-K →

Which reported numbers are a judgment call?
Management names Pension & retirement, Contingencies as critical estimates
each rests partly on management's judgment; the filing's note sets out the assumptionsverify →

The questions the record and the charts do not answer on their own; each carries the figure and the place to look.

Peers, Semiconductors

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
ARRYArray Technologies Inc.	$1.3B	23%	-1.7%	-2%	7%
SEDGSolarEdge Technologies Inc.	$1.2B	31%	10.2%	14%	9%
VIAVViavi Solutions Inc.	$1.1B	58%	5.6%	5%	8%
SYNASynaptics	$1.1B	43%	4.1%	8%	12%
SMTCSemtech Corporation	$1.0B	60%	11.8%	9%	16%
IPGPIPG Photonics Corporation	$1.0B	46%	17.9%	10%	16%
MTSIMACOM Technology Solutions Holdings Inc.	$967M	52%	11.7%	4%	20%
ICHRIchor Holdings	$948M	15%	5.2%	11%	4%
Group median	—	44%	7.9%	9%	11%

The price

What a price has to assume.

What the price implies

reverse-DCF

Type today's close and see the owner-earnings growth you'd have to believe to justify it, beside what Viavi Solutions Inc. has delivered.

Today’s price $

Through the cycle, Viavi Solutions Inc. earns about $89M on its 8.2% median owner-earnings margin. This year’s 5.7% margin runs below that; the reported figure may understate a lean year. Normalize, below, values the price on that through-cycle figure rather than the latest year.

Base Normalize · through-cycle ($89M) Net of stock comp (−$54M)

—

The assumptions Required return 9% Years of high growth 10 Terminal growth 2.5%

9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.

Enter a price above to run it.

Implied by the price—

Owner-earnings growth · ’21→’25−18%/yr

Owner-earnings growth · ’16→’25+7%/yr

Owner-earnings yield—

P/E (3-yr earnings ’23–’25)—

P/B—

Graham’s price gate—

Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.

Against a high-grade bond: Graham’s yardstick bond yield%

Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.

Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.

Owner earnings $46M on 234M shares outstanding, per the 10-Q cover, as of 2026-04-25; net debt $580M. The base is the latest year by default; Normalize values it on the through-cycle median owner-earnings margin (to avoid paying on a peak year). Net of stock comp treats option pay as the expense it is. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.

Weigh VIAV against another business →

The owners of VIAV: the meeting and the votes →

Cite: Owner Scorecard, "Viavi Solutions Inc. (VIAV), the owner's record," https://ownerscorecard.com/c/VIAV, data as of 2026-07-09.

Manual order: ← VIA its page in the Manual VICI →

Industry order: ← UMC the Semiconductors chapter WOLF →