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Infinera Shoots for the Moon

It's time once again for everyone's favorite game: What's Up With Infinera Inc.?

The well funded startup continues to be an enigma wrapped in a riddle wrapped in a warm puff pastry... or whatever-the-quotation-was. But whatever it's doing, it apparently works well.

Several Silicon Valley sources say the company is nearing production on a revolutionary new integrated optical component that has OEMs salivating over the potential for cost-savings in their next-generation optical systems. Infinera may already have a backlog of orders in the hundreds of millions of dollars, a source tells Light Reading. Sources also say the company's out raising a third round of financing, and it's a whopper: Word is, Infinera's looking for $100 million total, at a pre-money valuation in the range of some $200 million.

Infinera officials are keeping mum, but Mark Yin, vice president of marketing, did say that not all of the numbers are correct.

"It sounds like they're made up," he says. (He wouldn't say whether we're at least close.) "There's really nothing to report at this time. With news like that, we would definitely be telling Light Reading about it."

Several theories circulate about the company's mysterious new product. One story holds that Infinera is working on an optoelectronic chip that can regenerate signals without the use of an amplifier -- something that could threaten a whole raft of component vendors, including Goliath JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU). The company is also said to be designing the chip in a manner that can be more easily manufactured in volume, which would solve one of the greatest problems with the optical industry to date -- components that are difficult to manufacture and thus too expensive.

It's likely that Infinera's component is centered on an indium phosphide (InP) semiconductor that almost certainly includes active photonics (a laser, in other words).

Another guess is that Infinera is up to something more ordinary, such as a chip that will pack many more channels onto a line card. If so, it wouldn't be the first well hyped startup with an anticlimactic punch line.

"Infinera will have a very compelling value proposition," says Peter Wagner, an partner at Accel Partners, which is an investor. "Is it interesting? Yes."

Infinera's strong pedigree and deep-pocketed investors have added to the story (see Zepton Has an $86M War Chest and More on Infinera (née Zepton)). CEO Jagdeep Singh was the founder of Lightera, which became the crucial CoreDirector product at Ciena Corp. (Nasdaq: CIEN). Also on board are Lightera co-founder Drew Perkins and SDL/JDSU veteran David Welch.

The company has already raised more than $100 million, with investors over the years having included Accel, Agilent Technologies Inc. (NYSE: A), Applied Materials Ventures, Benchmark Capital, Juniper Networks Inc. (Nasdaq: JNPR), Kleiner Perkins Caufield & Byers, Sprout Group, Venrock Associates, and WorldView Technology Partners.

Anyway, with companies usually funded in 12- to 18-month increments, it's about the right time for Infinera to pass the hat again. Its last round came in mid-2001, when the company was still called "Zepton." [Ed. note: Wasn't that Superman's dog?]

If the company is coming close to production, it makes sense that it would now be looking for a sizeable round. The $100 million "basically implies they'll be ramping in 03," says one VC not involved with Infinera. "I had the impression that what they were doing wouldn't ramp until a year or two from now."

"I'd done the math on the money they raised and their burn rate, and certainly within the next 12 months they would need money," says Bruce Graham, an Infinity Capital partner who stresses that he knows nothing about Infinera's inner workings. Infinera did pony up for its own small manufacturing facility and was building its own prototypes, so it's feasible that the company's seen enough action to chew up previous funding.

— Craig Matsumoto, Senior Editor, and R. Scott Raynovich, U.S. Editor, Light Reading
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edgecore 12/5/2012 | 12:56:02 AM
re: Infinera Shoots for the Moon
Is Infinera building chips and selling them individually or are they building systems that will also contain these chips on them?

EC
zettabit 12/5/2012 | 12:56:01 AM
re: Infinera Shoots for the Moon I do not get why this story was published.

There is no hard info on what Infinera is doing. There is no hard info on who their orders are from. There is no hard info on what their funding situation is. The article refers only to "sources" and "guesses".

Come on guys (ie: LR journalists), don't publish if its just all guesswork. If the company won't tell you what they're doing, and everybody else is just speculating, then its time to realize you don't have a story and go on to something else....

How about bashing Matt Bross again - I love those stories.
fiber_to_toilet 12/5/2012 | 12:56:00 AM
re: Infinera Shoots for the Moon I feel they are making Yet-another-GOD BOX

Any comments ?

God 12/5/2012 | 12:55:59 AM
re: Infinera Shoots for the Moon "I feel they are making Yet-another-GOD BOX"

Looks like it, but I didn't order one :)

God

God 12/5/2012 | 12:55:59 AM
re: Infinera Shoots for the Moon "Is Infinera building chips and selling them individually or are they building systems that will also contain these chips on them?"

There has been a lot of buzz about their optical component that was going to allow super cheap regeneration of light, and bsically make edfas obsolete.

The latest rumor I heard was that they can't (yet?) deliver on these economic promises so they'll still need amps in their solution.

They also hired a sizable group of software engineers that is working on routing algorithms.

My guess is they are working on a combined swithing/dwdm platform, similar to what Innovance, Meriton and Movaz have.

The likely problem with selling that is that it requires wholesale upgrades, and no service provider has money for that these days.

Anyway, they got plenty of ideas about what to build and not build. Back when Infinera's founders were still with OnFiber, they had about every startup in the country bare their soul under NDA. Then they promptly turned around and started their own equipment company. Not very ethical if you ask me.

God

cyber_techy 12/5/2012 | 12:55:57 AM
re: Infinera Shoots for the Moon I am sure all the prospect VCs are consulting with BobbyMax these days regarding wether to fund this company or not
fiber_to_toilet 12/5/2012 | 12:55:51 AM
re: Infinera Shoots for the Moon LR should make a BobbyMax t-shirt

100 mill in these trying times is noteworthy. I guess they could cram everything inside a thumb sized chip and cram that inside a puffy cake and cram that inside a bun and sell it to cisco for a billion or two. The Management seems to have a good record but ALL THAT WAS ACHIEVED BETWEEN 1997-2000 is NOT TO BE TAKEN AS MERITORIOUS. It was fluke.


ratnl_invstr 12/5/2012 | 12:55:50 AM
re: Infinera Shoots for the Moon These guys were in India recently, talking to major software outsourcing firms and exciting them about prospects of working with Infinera. The following week, they turned around, started to poach key employees from these major firms to start their own operations!!! Does not sound like hall mark of a major corporation in the making.

IMHO, Ethics always count, whether it is an up market or a down market.
AccelPete 12/5/2012 | 12:55:45 AM
re: Infinera Shoots for the Moon One more thing
While I'm in the swing
Peter's an informer
To the Light Reading pro-forma
He's a big source
For maggie and steve (of course)
So when you see leaks from an investor
It's Pete, not sylvester
AccelPete 12/5/2012 | 12:55:45 AM
re: Infinera Shoots for the Moon Here comes Pete
Walking down the street
Another piece of screte
Like that Amber sheet
Give me $100 Mill
So I can pay the Bill
On my Beamer
U Stupid Schemer
Another piece of shit
From the Palo Alto Twit
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