Infinera Lowers Forecast

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paolo.franzoi 12/5/2012 | 3:38:26 PM

re: Infinera Lowers Forecast
So, if Infinera is so far ahead - why are they splitting business with competitors at major telcos (example with Tellabs at Qwest)?

seven

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nodak 12/5/2012 | 3:38:26 PM

re: Infinera Lowers Forecast Having also worked at Corvis, I do not think they are headed down that path. I have not read or heard anything about Infinera's CEO calling his customers idiots for not racing out to embrace his all optical dream regardless of the cost or thinking you could just install a OC-48 (remember OC-192 was never going to catch on) out to solve any problem since most companies were fiber rich. Corvis also had the added problem of buying up a competitor to its customers and bailing out failed start-ups of said CEO's venture capital company

Infinera seems to have taken a look at all of the various architectures out there (including buying Corvis' gear from Broadwing) and chosen one that will give their customers lower cost of ownership and faster turn up times.

All this makes me think they at least have a better foundation to build on and a better chance to succeed than Corvis did.

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Stevery 12/5/2012 | 3:38:25 PM

re: Infinera Lowers Forecast So, if Infinera is so far ahead - why are they splitting business with competitors at major telcos (example with Tellabs at Qwest)?

Obviously, INFN's customers are too stupid to realize that INFN is 4 years ahead of the competition.

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Stevery 12/5/2012 | 3:38:25 PM

re: Infinera Lowers Forecast Good point Stevery, yes, Infinera has been cashflow positive the last two quarters.

Usually, businesses are considered "profitable" if they sell product at a profit. Achieving cash-flow-positive status by selling shares of stock is not the prefered method.

Christ, it really is CORV all over again.

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hyperunner 12/5/2012 | 3:38:25 PM

re: Infinera Lowers Forecast Good point Stevery, yes, Infinera has been cashflow positive the last two quarters. The next two are going to be the interesting ones though.

Winning a Tier 1 is a double-edge sword, as always.

hR.

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optiplayer 12/5/2012 | 3:38:24 PM

re: Infinera Lowers Forecast Actually, INFN was quite profitable in the qtr that ended in March. Operating income was $25M on sales of $138M for a quite respectable 18% operating margin. On an operating cash flow basis, the company was positive for the last 2 qtrs and very close to positive the 2 qtrs before that (so CF positive for the past 4 qtrs in aggregate).

When one considers that ~18 months ago this was a company with gross margin in the single digits if not negative the progress they have made is truly remarkable. At the time Stevery could be found on these boards scoffing at INFN as a company that could never be profitable as it would never be able to increase its gross margin due to yield issues on the PICs yet here they were 18 months later with GM at 45% a level that companies like NT or ALU would kill for.

Stevery is bitter over INFN, he has never said why... his input is incorrect and meaningless.

This announcement is clearly a big hiccup for INFN but is not all that unexpected given its customer concentration and the nature of telecom in general. That said the DT win is big and the trend is good for INFN. They need more customers to smooth out the bumps and they need to continue to improve profitability. I am confident they can do both.

Further, Sailboat claims he knows several teams that could do what INFN has done. I don't doubt that but first, they don't have the money (even if its half what INFN spent... they don't have it) and second it will take 2-3 years minimum and INFN is not standing still.

Finally, comparisons to CORV are nonsense. CORV had one customer that they bought (someone mentioned 4... please name the other 3) and really never produced any meaningful, consistent revenue.

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litereading 12/5/2012 | 3:38:24 PM

re: Infinera Lowers Forecast INFN is selling to DT at $4M below cost - I call that "buying" not "winning."

Great product, lowest cost (today) - but how long will shareholders permit this model if their profitability does not support $10/share? A penny or two a quarter won't support that shareprice.

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rjmcmahon 12/5/2012 | 3:38:23 PM

re: Infinera Lowers Forecast re: "Stevery is bitter over INFN, he has never said why... his input is incorrect and meaningless."

Stevery posts usually are on the mark or funny or both. If anything he's bitter about folks hyping optical stocks on these boards. He's earned my respect over the many years of participating in these discussions. I'd suggest if you want to dispute the facts with him do so but leave the argumentum ad personam on the drafting table.

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^Eagle^ 12/5/2012 | 3:38:22 PM

re: Infinera Lowers Forecast Stevery,

I also take exception to the last item on his list:

"defacto way to build optical networks". BS. That would imply that ALU, Nokia-Siemens, Ericsson-Marconi, Huawei, ZTE, NEC, Fujitsu, Optium-Finisar, JDSU and a host of others have no revenue, are failing and they are not shipping FAR larger numbers of end to end links / capacity than IFN.

I think IFN is a good company. but has not yet proven to me that they are the "be all and end all" of optical networking.

sailboat

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Stevery 12/5/2012 | 3:38:22 PM

re: Infinera Lowers Forecast Thanks RJ. It turns out that optiplayer was on my ignore list, which was working just fine until you quoted him. So thanks for nothing. :)

I was trying to remember why I put the guy on "ignore". A quick search reminded me of this post:
http://www.lightreading.com/bo...

In that particular case, he had incorrect facts about financing and decided that the multiple people who disagreed with him were actually one person with many aliases. Of course, everyone has to start somewhere to gain knowledge: However, it was one of several such posts. I decided I had better things to do, and stuck him on ignore.

If anything [Stevery is] bitter about folks hyping optical stocks on these boards.

Yes, although "pissed-off" is better description than "bitter". There are people that look to engineers to solve problems, and engineers used to have a societal reputation for solid truth. Engineering problems are hard enough to solve, and figuring out how to allot resources among the competing problems is equally tough. The hypesters (the corvis idiots in particular) have been nothing but a blot on the optical world since their arrival in the late 90s. There has been a great societal cost.

As for this specific board, the tone has taken a strange turn. For example, ninjaturtle wrote earlier that he is a INFN employee hyping the stock, and then: [ALU] Run by a Bitch...keep her satisfied DUDE!!!!!!! Now, I am no great fan of Pat Russo, but that actually causes a twinge of sympathy on her behalf. I did not think that was even possible. Overcoming her strategic inadequacies is difficult enough, but adding sexism is just stupidity at its finest. (I doubt she would even notice, but it irks me on her behalf.) I can only assume that INFN management would not allow someone like that to touch the internet with their name if they knew.

If anyone has suggestions on how to improve the signal-to-noise ratio, don't keep it a secret.

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