& cplSiteName &

Infinera's Looking at a Tough 2011

Craig Matsumoto
1/28/2011

Analysts are slamming Infinera Corp. (Nasdaq: INFN) today, now that it's apparent the company's troubles could stretch beyond one quarter and all the way into 2012.

After reporting fourth-quarter revenues of $117.1 million on Thursday, Infinera predicted revenues of just $90 million to $97 million for its first quarter, which ends in March.

That's partly because Infinera sold so much gear in mid-2010; customers still haven't filled up those boxes. But another factor is the lack of a 40Gbit/s option for the DTN system. "There are some opportunities in the short term that we are missing out on with customers who would require higher fiber capacity today," CFO Ita Brennan said on Thursday's earnings call.

Why this matters
At worst, this could mean Infinera struggles throughout 2011, especially if 40Gbit/s demand increases. Infinera won't release a 40Gbit/s product until midyear, and its R&D is focused on delivering a 100Gbit/s product in 2012. Analysts think the 100Gbit/s cards could be a huge product for Infinera. But their reports this morning say the company will be treading water in the meantime:

  • Mike Genovese of MKM Partners writes: "We expect 2011 to be tough for Infinera as the market for new optical capacity continues to shift to 40G, and Infinera does not have a solution."
  • George Notter of Jefferies & Company Inc. writes: "This is now a 'show me' stock. ... It's now clear Infinera will be working through that hangover for the remainder of Q1 at least."


For more
Here's how Infinera's 2010 went, including its 100Gbit/s decision and the prediction of a tepid fourth quarter.

— Craig Matsumoto, West Coast Editor, Light Reading

(31)  | 
Comment  | 
Print  | 
Related Stories
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Page 1 / 4   >   >>
Pete Baldwin
Pete Baldwin
12/5/2012 | 5:14:18 PM
re: Infinera's Looking at a Tough 2011


The heart of all this seems to be 40G pricing.  Infinera is saying that, measured by $ per gigabit transported, 40G has reached parity with 10G, and that's leading the fiber-hungery operators to grab for 40G. Interesting.


I think you can still argue that the 40G life cycle will get cut short once 100G is available. In the meantime, though, there's some good news for the vendors that have 40G out there.

tojofay
tojofay
12/5/2012 | 5:14:14 PM
re: Infinera's Looking at a Tough 2011


I wonder if other vendors are seeing any profit on their 40g sales. INFN's 40g non pic product will have twice the capicty and is due mid year. Not so good news for other vendors. More bad news: 100g pic due next year.

Stefan Sip
Stefan Sip
12/5/2012 | 5:14:14 PM
re: Infinera's Looking at a Tough 2011


10G and 40G are now at price parity, after 40G has been out and about for several years.  100G will not be commercially viable for another 3 to 4 years.  I don't have a crystal ball, just a student of history.


For Infinera, it will be difficult to win new footprint based on their roadmap and economics.  I think the reaction from the street is a reflection of the threat to Infinera in 2011.  Even if 100G will be available in 2012, it will not be cost effective, so operators should still buy based on the best 40G solutions in the market.  With 40G, Infinera is unproven, to say the least.  If competitors can further drive down the cost of 40G, Infinera will be in big trouble.  

macster
macster
12/5/2012 | 5:14:13 PM
re: Infinera's Looking at a Tough 2011


"10G and 40G are now at price parity, after 40G has been out and about for several years....."


What do you mean by this? 10G price = 40G price? Or 4*10G price = 40G price?

Stefan Sip
Stefan Sip
12/5/2012 | 5:14:12 PM
re: Infinera's Looking at a Tough 2011


I should have wrote "price parity on a per gigabit basis"

macster
macster
12/5/2012 | 5:14:11 PM
re: Infinera's Looking at a Tough 2011


I should have wrote "price parity on a per gigabit basis"


Hi, does this mean you meant 4*10G = 40G?


 

Stefan Sip
Stefan Sip
12/5/2012 | 5:14:06 PM
re: Infinera's Looking at a Tough 2011


If INFN's 100G product is truly disruptive like its 10G product, then INFN will dominate that segment again.  That's why one of the analysts stated the INFN is a "show me stock" at this point. 


10G has been commercially available/economical since 1998/1999.  For 10 years+ now, through the massive Internet growth, 10G has held its own.  40G was commercially available about 2 years ago.  Deployments have been slow due to cost.  Without a game changer, 40G deployments will hit its peak 3 years from now.  For the OEMs who are betting the boat on 100G, it will be a stressful waiting period. 

ninjaturtle
ninjaturtle
12/5/2012 | 5:14:06 PM
re: Infinera's Looking at a Tough 2011


I would not say that for every carrier a 40G is a solution or even an economically sensible decision this year. I also agree that most 100G solutions will not be compelling economically in 2012. However, INFN’s 100G will and that’s where the disruptive technology comes into play. They have been delivering for the past 5 years the 10G PIC and are the #1 supplier of 10G DWDM for years without a single failure. The 100G PIC will be the compelling 2012 migration for existing customers as well as NA Tier 1s. As a result they will be the #1 supplier in the 100G market as well.


Just recalling more then 6 years ago a lot of people were bashing INFN on LR predicted what Infinera was doing would never become a commercial success. In fact failure was inevitable and no IPO would ever happen. So based on history I wouldn't be betting against INFN. It has proven too many people wrong and will continue for years to come.


Disclaimer: Infinera employee since 2002.


 

ninjaturtle
ninjaturtle
12/5/2012 | 5:14:05 PM
re: Infinera's Looking at a Tough 2011


Not sure where you heard that but that's not what we here on a daily basis...just sayin.

SolarSailor
SolarSailor
12/5/2012 | 5:13:55 PM
re: Infinera's Looking at a Tough 2011


They have been delivering for the past 5 years the 10G PIC and are the #1 supplier of 10G DWDM for years


Hahaha... Some people are seriously smoking something. If they were anywhere near #1 supplier for 10G DWDM, their results would not have been this appalling.


Firstly, the reality is that Huawei has been the leader in 10G DWDM for years, and arguably ALU,by magnitudes... While INFN only imagines they have anything but a pinky-toe hold in the DWDM market!


Secondly, anyone who believes that 100G is not already economically viable in many instances needs to go speak to the 10 or so Tier-1 Telcos globally who are already deploying it, today!


INFN is a sinking ship, they just don't know it yet.

Page 1 / 4   >   >>
Featured Video
Upcoming Live Events
December 3-5, 2019, Vienna, Austria
December 3, 2019, New York, New York
March 16-18, 2020, Embassy Suites, Denver, Colorado
May 18-20, 2020, Irving Convention Center, Dallas, TX
All Upcoming Live Events
Partner Perspectives - content from our sponsors
How China's 5G Launch Will Gear Up the Global 5G Industry
By Daisy Zhu, Head of Marketing Operations, Huawei Wireless Network
5G Business Case Revisited
By Hayim Porat, CTO, ECI
All Partner Perspectives