Optical components

Infinera Wallops Q2 Guesses, Reassures on Transmode Deal

Infinera solidly beat its own guidance and analyst estimates for its second-quarter financials, a performance fueled in part by three service provider customers -- one apiece in the cable TV, Tier 1 telco and wholesale segments -- that were each responsible for more than 10% of the vendor's $207.2 million in Q2 revenue.

The company also said it has now invoiced 12 customers for its Cloud Xpress metro transport platform, with four of those customers already placing follow-up purchase orders for the product. That means the Cloud Xpress is on track to enter the $30 million-to-$60 million revenue range this year that company watchers have been anticipating. However, Infinera Corp. (Nasdaq: INFN) CEO Tom Fallon admitted on the company earnings call Wednesday that metro deployment decisions have occurred "more slowly" than Infinera expected, and that it is unlikely revenue for the product will approach the upper part of that range. (See Infinera Posts $207.3M Revenue in Q2 and Equinix Uses Infinera for DCI in Hong Kong.)

Still, the best may be yet to come for the Cloud Xpress and the metro opportunity in general. Infinera so far only has been shipping 10G and 40G versions of that product, with the 100G version set to ship during this quarter. Fallon said a handful of potential Cloud Xpress customers have held off on ordering the system because their needs are already in the 100G range. (See Infinera Unveils 100GE Cloud Xpress.)

Yet, amid all the current industry focus on the metro market, Fallon reminded company watchers that "long haul still represents more than 90%" of the company's revenue, and that the current market cycle is nowhere near abatement. "I remain confident that 100G long-haul demand will continue to grow through the end of the decade."

For anyone concerned that a core group of "ten-percenters" means that Infinera's revenue take is becoming too reliant on too few customers, Infinera officials noted that no single customer has ever accounted for more than 10% of the company's revenue across a full year.

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Regarding Infinera's pending acquisition of Swedish vendor Transmode, Infinera officials had no new updates on the progress of the transaction, but reassured listeners that it will do what it takes to close the deal. Infinera CFO Brad Feller said on the call, "We have to get to 90% approval of shareholders. We've said that 54% of holders signed up before offering period even started. We've obviously talked to other holders who are receptive to it."

Declining to handicap Infinera's odds of closing the deal, he added, "We'll know better on the 7th [the offering period is currently scheduled to end on August 7], but we're very committed to making this deal happen." (See Infinera Enhances Offer to Transmode Shareholders.)

— Dan O'Shea, Managing Editor, Light Reading

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