Busy Day at Infinera

So, Infinera Corp. (Nasdaq: INFN) has won one big customer, but may have another in jeopardy, and is losing a CEO, but has another in mind.

The company also announced a small layoff and -- oh yeah -- earnings for the second quarter (ended June 27) today.

First, Infinera founding CEO Jagdeep Singh, 42, will be stepping down in January, the company announced today. He'll be succeeded by Tom Fallon, chief operating officer. (See Infinera Changing CEOs.)

Then, Infinera announced its latest Tier 1 carrier win, with NTT Communications Corp. (NYSE: NTT), to go along with a Telia Company win announced in April. (See Infinera Reports Q2, Wins NTT and Viking Victory for Infinera .)

All told, Infinera has won six deals with Tier 1 carriers in the past four months, Singh said on the earnings call. He also said the company has won a "full overbuild" contract with a North American wholesale carrier.

But an analyst report yesterday suggests Infinera's first, best customer is at risk. Huawei Technologies Co. Ltd. may have won a 40-Gbit/s optical deal with Level 3 Communications Inc. (NYSE: LVLT), according to Jefferies & Company Inc. analyst George Notter.

Level 3 represented 20 percent of Infinera's revenues during the company's second quarter -- but that's down from 30 percent during the first quarter.

Perhaps to deflect concerns that Infinera doesn't have 40-Gbit/s technology yet (its cards do four lanes of 10 Gbit/s each), Singh noted on today's earnings call that a 40-Gbit/s product is in the works. "The customers have seen our technology in our labs," he said.

In March, Infinera noted it had successfully demonstrated a photonic integrated circuit with 10 channels of 40 Gbit/s each. (See Infinera Touts 400G PIC.)

Separately from all this, Singh said during the call that Infinera will be cutting 50 employees as it closes its Maryland fab. Those operations will be moved to Infinera's Silicon Valley facilities. Infinera expects to take a $6 million charge during its third quarter, and another $2 million charge in its fourth quarter.

Infinera employed 937 as of December 2008.

As for the earnings, Infinera's second-quarter revenues of $69 million and non-GAAP losses of 19 cents per share were on par with analysts' expectations. (See Infinera Reports Q2, Wins NTT.)

Table 1: Infinera Q2 Summary
2Q08 2Q09 Change
Revenues ($M) 90.8 68.9 -24%
Net Income ($M, GAAP) +42.9 -27.1 -163%
EPS (GAAP) +44� -28� -163%
Share Price $8.99 $7.17 -20%
Source: Infinera

For its third quarter, Infinera is predicting revenues of $80 million to $82 million, compared with $74.53 million predicted by analysts.

— Craig Matsumoto, West Coast Editor, Light Reading

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