Customer Growth Driving Infinera Success
"Our customers are growing extraordinarily fast, and we are picking up market share," Tom Fallon, president and chief executive officer, said on the Infinera analyst call Thursday evening. Infinera now has four different customers -- two wholesale providers, a cable operator, and an Internet company -- that individually represent 10 percent of its business, showing increased diversification and less reliance on Level 3 Communications Inc. (NYSE: LVLT) as a customer, Fallon said.
Some of the new market share was the result of adding network operators to Infinera's customer rolls that had been using both Ciena Corp. (NYSE: CIEN) and Nortel Networks Ltd. as suppliers and now are looking for a second supplier, according to Rick Dodd, VP of corporate marketing for Infinera.
In addition, Infinera continues to add business from its six Tier 1 customers, even though it hasn't added a customer in that category. Fallon said Infinera continues to put itself in position to win new business in that category and believes it will "find the right opportunity to match what we have at the right time."
Fallon reiterated Infinera's faith in its current product roadmap, which includes introduction of 100-Gbit/s technologies for the mass market in 2012. The key to that strategy is that Infinera's 100-Gig systems will be economical to deploy, Fallon said, something he thinks competitors coming to market with 100-Gig systems later this year might not be able to claim. (See Infinera Ditches 40G, Talks 100G)
Both Alcatel-Lucent (NYSE: ALU) and Ciena/Nortel are expected to have 100G systems in deployment later this year.
"I think the market is going to start having some modest numbers -- say, double-digit deployments -- of 100-gig waves this year," Fallon said, adding that he doesn't expect much market traction until late 2012 or early 2013. "I've seen a lot of information around [competitors'] capabilities but almost nothing around the finances of current 100-Gig systems. Until the market understands what the economics are, it is really difficult for me to speculate on success based on technology."
Infinera will offer interim 40-Gig technology on a proprietary basis to its current customers with specific needs for those systems, such as submarine cable operators, Fallon said.
Infinera did add one new customer, Mid-Atlantic Broadband Cooperative , this quarter, based on use of broadband stimulus money, and it now has two customers that are using stimulus funds to buy Infinera equipment. But in general, Fallon conceded, the flow of stimulus money has been slower than expected.
— Carol Wilson, Chief Editor, Events, Light Reading