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Infinera Obliterates Q4 Estimates

Infinera Corp. (Nasdaq: INFN) posted a narrower GAAP loss in the fourth quarter, but it demolished analyst estimates on invoiced shipments, the metric that the company says really counts.

By generally accepted accounting principles (GAAP), the optical equipment vendor posted a loss of $3.9 million, or 4 cents per share, on revenues of $76.1 million. That compared with a loss of $25.0 million, or $3.55 per share, on sales of $43.8 million during the same quarter a year ago. (See Infinera Reports Q4.)

Invoiced shipments were up 32 percent, to $93.4 million in the fourth quarter of 2007 from $70.5 million in the fourth quarter of 2006. Wall Street estimated that Infinera's fourth-quarter revenue would be $85 million on an invoiced shipment basis.

But it's in the non-GAAP earnings where Infinera blew the numbers away. There, it reported net income of $15.9 million, or 17 cents per share, for the fourth quarter, beating the consensus estimate of 2 cents per share.

That compares with a non-GAAP loss of $7.3 million, or $1.04 per share, in the fourth quarter of 2006.

Invoiced shipments matter because Infinera doesn't report a sale all at once, instead spreading the money across multiple quarters or even years, as a software company would. As a result, Infinera says invoiced shipments are a better measure for what's being sold. (See Infinera Smooths Out the Lumps.)

Infinera shares were up 83 cents (8.5%) at $11.02 in early after-hours trading.

The company, which makes a highly integrated optical transport system based on photonic integrated circuits, added three new customers in the fourth quarter, bringing its total customer count to 41.

After heavy dependence on Level 3 Communications Inc. (NYSE: LVLT) early on, Infinera is getting sales from a wider customer base. Four customers represented at least 10 percent of Infinera's revenues last quarter, including Level 3 and Cox Communications Inc. , the company says. No customers accounting for more than 18 percent of its sales.

In the previous year's fourth quarter, the company had only two 10 percent customers, with Level 3 accounting for nearly half of all invoiced shipments in the quarter.

While Infinera scored its earliest customers, including Level 3, due to the density and scaleability of its gear, the company has recently begun talking up the service provisioning advantages of deploying its equipment, including "bandwidth virtualization," which the company says allows faster provisioning of services in carrier networks.

That marketing pitch has helped it win accounts in companies like Equinix Inc. (Nasdaq: EQIX), XO Communications Inc. , and 360networks Inc. , among others. (See Equinix Calls on Infinera, XO Picks Infinera Again, 360networks Picks Infinera, and Infinera Pulls a 360.)

Elsewhere in its fourth-quarter numbers, Infinera said GAAP gross margins rose to 36 percent in the fourth quarter, from 34 percent in the third. Gross margins on an invoiced shipments basis were 47 percent in the fourth quarter, compared with 43 percent in the third.

For the fiscal year, Infinera posted a loss of $55.3 million, or $1.09 per share, on GAAP revenues of $245.9 million. That compared with a loss of $89.9 million, or $14.90 per share, on sales of $58.2 million during the year-ago quarter.

On an invoiced shipments basis, the company earned $24.1 million, or $0.37 per share, on revenues of $309.3 million in fiscal 2007. That compared with a loss of $49.4 million, or $8.18 per share, on invoiced shipments of $146 million in 2006.

— Ryan Lawler, Reporter, Light Reading

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