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Infinera Momentum Continues

Infinera Corp. (Nasdaq: INFN) posted a narrower net loss in the third quarter, as the company reported continued sales momentum and an increasingly diverse customer base. (See Infinera Reports 3Q.)

The optical equipment vendor said net loss for the third quarter was $5.5 million, or 7 cents a share, on GAAP revenues of $62.2 million. That compared with a loss of $28.6 million, or $4.42 per share, on sales of $7.7 million during the year-ago quarter.

Due to accounting rules, Infinera doesn't report a sale all at once but spreads the money out over multiple quarters or even years like a software company. As a result, the company reports invoiced shipment revenues separately from GAAP revenues. (See Infinera Smooths Out the Lumps.)

The company said invoiced shipments were up 91 percent year over year, from $42.0 million in the third quarter of 2006 to $80.4 million in the third quarter of 2007.

Infinera said GAAP gross margins rose to 34 percent in the third quarter, from 28 percent in the second quarter. Gross margins on an invoiced shipments basis were 43 percent in the third quarter, compared with 37 percent in the second quarter.

The company, which makes a highly integrated optical transport system based on photonic integrated circuits, said it added seven new customers in the third quarter, bringing the company's customer roster to 38, compared with 31 in the second quarter of 2007.

Recent announced customer wins include 360networks Inc. , Cox Communications Inc. , XO Communications Inc. , EWE TEL GmbH , and North China Grid Company (NCGC) Limited. (See Infinera Pulls a 360, 360networks Picks Infinera, Cox Picks Infinera, XO Picks Infinera Again, Infinera Adds to Euro Footprint, and Infinera Wins in China.)

Infinera also said its reliance on Level 3 Communications Inc. (NYSE: LVLT) is waning. Level 3 accounted for 28 percent of revenues in the quarter, as opposed to 48 percent of revenues in the second quarter, and 55 percent of sales a year ago.

Continued strength in its business has led Infinera to prepare a secondary public offering, quick on the heels of its IPO. Earlier this month, the optical vendor said it would raise $113 million by issuing 5 million new shares to the public market. (See Infinera Aims to Raise $113M and Infinera Preps Offering.)

With all this momentum, it's little surprise that Light Reading readers have taken notice. Last week, we announced that Infinera CEO Jagdeep Singh won the reader-nominated and reader-chosen Leading Lights award for Person of the Year. (See LR Names 2007 Leading Lights Winners and Light Reading's Person of the Year: The Finalists.)

— Ryan Lawler, Reporter, Light Reading

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howsweetitis 12/5/2012 | 3:00:14 PM
re: Infinera Momentum Continues INFN should be a $50 stock with profits starting to grow rapidly. 2008 should be a big year for INFN as existing installed CE boxes start adding high profit line cards and TAMs to their systems. I think the number was an incremental $700M if all boxes installed to date were filled with DLMs and TAMs without shipping out one additional box going forward. Based on ~ a 65% margin that looks like a lot black numbers in 2008 and beyond. GO INFN. You are right on course. For the sake of total disclosure I am a INFN stockholder.
twill009 12/5/2012 | 3:00:12 PM
re: Infinera Momentum Continues INFN is a $11 stock, as its valuation drops back nearer to peers like Ciena. That is assuming everything goes well. If there is a problem, stock goes to $6.
VCs are selling as fast as they can. So should you.
Full disclosure: i am not yet short the stock, but considering it.
Stevery 12/5/2012 | 3:00:11 PM
re: Infinera Momentum Continues INFN should be a $50 stock with profits starting to grow rapidly. 2008 should be a big year

Aaahhh. Just like the good ole days.
I miss corvis.
Balet 12/5/2012 | 3:00:10 PM
re: Infinera Momentum Continues I should've sold my Optium stocks...ahrrr

I think Infinera has a good story ahead but Y2000 over-evaluation times are long gone...
twill009 12/5/2012 | 3:00:10 PM
re: Infinera Momentum Continues a couple reasons: 1) i am always slow to act, unfortunately, and 2) management is going to be on the road marketing the deal, and could goose the stock after this recent dip.
longshort 12/5/2012 | 3:00:10 PM
re: Infinera Momentum Continues "Full disclosure: i am not yet short the stock, but considering it."

Better hurry up, it is getting less attractive to short in a hurry.

Why the hold-up? Just curious ...
longshort 12/5/2012 | 3:00:09 PM
re: Infinera Momentum Continues MSFT values Facebook at $15 billions.

Bubble is back!!
optiplayer 12/5/2012 | 3:00:05 PM
re: Infinera Momentum Continues "VCs are selling as fast as they can. So should you."

VCs haven't sold anything yet nor has any other insider.

"INFN is a $11 stock, as its valuation drops back nearer to peers like Ciena. "

Ciena may be a peer in the market and they have had a terrifice couple of years but they are not producing the type of growth (albeit from a much smaller base) that INFN is.

Revenue/invoicings way up, margins way up and customer concentration way down... its doesn't get much better for INFN.

If you are convinced its headed for a 50-75% haircut and you are not short then your simply full of it.
Stevery 12/5/2012 | 3:00:00 PM
re: Infinera Momentum Continues Interestingly, it seems that some "market neutral" guys have moved in. I've heard position reports of simultaneous long cien / short infn, assuming that the two are going to equilibrate. Adding more shares to the market will most likely help that equilibration.

The disparity of those two valuations was pointed out on this board long ago. Wish I'd acted on it then. :)

twill009 12/5/2012 | 3:00:00 PM
re: Infinera Momentum Continues Based upon the latest filing, 5 millions shares are being sold by insiders and VCs. According to page 121 in the prospectus, 1.7m shares are being sold by RWI Ventures, 500k by Huitung Investments, and good sized chunks by a variety of other early stage investors including Level 3 and Applied Materials.

If it doesn't get much better for INFN, then it certainly is the time to sell. I thought the stock might get boosted temporarily by the deal roadshow, but it appears i was wrong as it is down again today (10/29 Monday). I would rather be slow to establish a position than slow to cut my losses in a highly speculative stock.

That said, my original post was just intended to rebut the pie-in-the-sky stuff floated by the original poster. Maybe it all works out, or maybe not. People need to read the prospectus and take the risks seriously.

And yes, i am full of it.
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