Infinera Boosts Avanex

While still losing money, Avanex reports Q1 results good enough to boost the stock 12% after hours

Craig Matsumoto, Editor-in-Chief, Light Reading

November 3, 2006

3 Min Read
Infinera Boosts Avanex

Optical components vendor Avanex Corp. (Nasdaq: AVNX) had a surprise customer in its first quarter -- Infinera Corp. (Nasdaq: INFN) (See Avanex Reports Q1.)

During an earnings call with analysts yesterday, Avanex CEO Jo Major called out Infinera, along with Alcatel (NYSE: ALA; Paris: CGEP:PA), as each representing 10 percent or more of the first quarter's near $51 million sales.

Nortel Networks Ltd. and Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) each just missed the 10 percent mark, Major said.

The mention of Infinera is surprising in a couple of ways.

First, it's unusual for a startup to be a 10 percent customer for a public company -- normally it's just the bigger names, such as Alcatel and Nortel, that top the 10 percent mark.

Second, Infinera builds its own optics, cramming them onto homemade indium phosphide (InP) chips. (See Infinera Declares WDM War.)

Avanex didn't hint at what Infinera is buying, though Major did note that Avanex hit record revenues in transponders, modulators, and dispersion compensators during the quarter.

For its first quarter, ended Sept. 30, Avanex reported net losses of $9.8 million, or 5 cents per share, on revenues of $50.9 million, compared with losses of $9.1 million, or 4 cents per share, on revenues of $45.6 million the previous quarter.

For its first quarter a year ago, Avanex reported losses of $16.9 million, or 12 cents per share, on revenues of $41.2 million.

Avanex's non-GAAP first-quarter loss of 3 cents per share was a penny worse than the 2 cents analysts had forecast, according to Thomson First Call , and revenues were pretty much in line with expectations. But Avanex predicted second-quarter revenues of $52 million to $55 million, beating the $51.8 million forecast recorded by First Call.

Avanex shares climbed 19 cents (12.5%) to $1.71 in after-hours trading, marking the second quarter in a row that investors have been happy with the company's results. (See Avanex Soars on Q4 Forecast.)

Avanex isn't quite out of the woods yet, though. While the company has $16.4 million in cash, that figure is down from the $29 million reported at the end of June. At least some of that was attributable to problems with Avanex's invoicing system and is balanced out by a $12.6 million spike in accounts receivable, Avanex officials said on the call.

Cash has been a key question for Avanex -- and for fellow components vendor Bookham Inc. (Nasdaq: BKHM; London: BHM) -- as both companies try to right themselves before the money runs out. (See Avanex Concerns Continue.)

Avanex is showing some signs of life. While the company still isn't profitable, it's claiming some progress with new products.

For example, Avanex says an optical amplifier with monitoring capability is shipping into the backbone of a Tier 1 carrier's fiber-to-the-home buildout. That product "was a strong contributor to our revenue performance this quarter," Major said.

Major also highlighted a "multimillion dollar" win in Asia for new 980nm pump lasers targeted at the submarine market. (See Avanex Intros Pumps.)

Avanex also intends to join the reconfigurable optical add/drop multiplexer (ROADM) race, but believes that high prices are stunting growth in that market. So, the company is developing a ROADM subsystem built "with more modest functionality but at a substantially lower price." That product is expected to debut before OFC/NFOEC in March, Major said.

— Craig Matsumoto, Senior Editor, Light Reading

About the Author(s)

Craig Matsumoto

Editor-in-Chief, Light Reading

Yes, THAT Craig Matsumoto – who used to be at Light Reading from 2002 until 2013 and then went away and did other stuff and now HE'S BACK! As Editor-in-Chief. Go Craig!!

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like