Data Center Interconnect

Infinera Strategy Pays Off, Stock Soars

Infinera's share price soared by more than 13% in pre-market trading Friday morning following the publication of impressive fourth-quarter financials and a very positive outlook for 2015 that suggests the optical infrastructure company is on the money with its product development and launch strategy.

Late Thursday Infinera Corp. (Nasdaq: INFN) reported fourth-quarter revenues of $186.3 million, up 34% year-on-year, and an operating profit of $12.9 million, compared with an operating loss of $7.1 million a year earlier. The vendor also managed a net profit of $8.4 million, compared with a net loss of $10.2 million in the same quarter a year earlier. (See Infinera Reports 'Exceptional Year' Earnings.)

That completed a good year for Infinera. Its 2014 revenues came in at $668.1 million, up by 22.8% compared with 2013, and it managed a net profit for the year of $13.7 million compared with a net loss of $32.1 million in 2013.

Those numbers were better than financial analysts had been expecting and the company's forecast for early 2015 also exceeded expectations, coming in at $180-190 million.

Investors liked the news, sending Infinera's share price up nearly 13.9% in pre-market trading early Friday to $16.40.

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Driving Infinera's growth is its packet-optical DTN-X platform, which attracted 10 additional customers in the fourth quarter alone, taking the total number to 59. Of those 10, three were first-time Infinera customers and all three are based in Europe, noted CFO Brad Feller during the company's earnings conference call late Thursday. (See MENA Deploys Infinera's DTN-X in Egypt and Windstream Expands Long-Haul 100G.)

And the company is already gaining traction with its new Cloud Xpress platform, which it unveiled in September 2014 for the data center-to-data center interconnection market (also known as the metro cloud market) and started shipping in December. (See Infinera Targets Data Center Connectivity Market With Metro Platform.)

CEO Tom Fallon told analysts on the earnings call that Infinera has eight customer commitments for Cloud Xpress "in the form of POs [purchase orders], contracts or field trials to date, including three top Internet content providers," according to a Seeking Alpha transcript of the earnings call.

Infinera, which won the 2014 Leading Lights award for Company of the Year (Public), believes it has entered the metro cloud market at just the right time and that the market will grow from very little just now to be worth $3 billion by 2019 (citing ACG Research forecasts). (See Leading Lights Awards 2014: The Winners.)

Next up for Infinera is the metro aggregation platform market, which the company is aiming to launch a product for by the end of 2015. With that timeframe in mind, Fallon, in response to analyst questions, noted that Infinera has not participated in the recent Verizon Communications Inc. (NYSE: VZ) metro deal bidding process (though he did not refer to Verizon by name) as "our metro aggregation product … is not one that is going to be in time for what they're looking for now." (See Ciena, Cisco Tipped for Verizon Metro 100G .)

— Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading

ninjaturtle 1/23/2015 | 9:20:23 PM
Re: Stock up 18%!! What is even more remarkable, is prior to the IPO in 2007 most on LR thought INFN would never be able to commericalize a PIC and that it would die in a lab in Sunnyvale. Never say Never. Congrads to the INFN team and their accomplishments. 
Sterling Perrin 1/23/2015 | 11:41:51 AM
Re: Stock up 18%!! Ray,

Success at 100G, with the DTN-X, has gotten Infinera to this point so far - that was certainly the 2014 story. It's interesting that, moving forward, to keep them at this level they will be measured by their success in the metro market. This will break into two parts: the DCI segment with CloudXpress but also the broader SP metro market which will need to be addressed.

Steve Saunders 1/23/2015 | 10:28:43 AM
Re: Stock up 18%!! What's almost equally impressive, Ray, is that you called this last year - hence Infinera winning the best public company award at Leading Lights in Chicago. I recall one other pub co having an absolute melt down about this choice... well, you were obviously dead right. Kudos.
mendyk 1/23/2015 | 10:23:08 AM
Re: Stock up 18%!! No doubt a cause for celebration -- even if validation by an irrational instant stock price jump is a bit dubious. But, hey -- it's working wonders for Netflix.
[email protected] 1/23/2015 | 9:47:47 AM
Stock up 18%!! The markets are now open and Infinera's share price is up 20% to $17.28  -- that is staggering.

A year ago it was at about $7.
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