x
DWDM

IPO Alert: Infinera Files Its S-1

Infinera Corp. (Nasdaq: INFN) filed its S-1 with the Securities and Exchange Commission (SEC) today, and no, it's not profitable yet.

But the filing itself is a landmark for the Silicon Valley superstartup that intends to change the way DWDM networks are built.

Infinera's IPO has been anticipated for about a year, and strong signs of an S-1 filing were cropping up in January. (See Is Infinera Ready for an IPO?)

The company, now with 605 employees, has raised $315 million since its inception in 2000 as Zepton Networks. Its most recent round, a whopping $110 million, came in July. (See Infinera Raises Another $110M.)

But Infinera has only started to get meaningful revenues. Its true sales have rocketed -- to $58.7 million in 2006, according to the S-1 -- but $44.3 million of that came in the quarter ended Dec. 31. Revenues for 2005 totaled just $4.1 million.

As for the losses, they're hard to ignore: $89.1 million, or $14.55 per share, for calendar 2006, and another $215 million during the four previous years, according to the S-1.

Table 1: Infinera in the Red
    2002   2003   2004   2005   2006 
Revenues ($M) 0 0 0.6 4.1 58.7
Net loss ($M) (34.1) (50.2) (66.5) (64.6) (89.1)
Net loss per share ($17.05) ($16.10) ($15.30) ($13.76) ($14.55)
Cash & equivalents ($M) 50 54.2 40 37.1 29.6
Source: Infinera Corp.; figures as of Dec. 31 of each year




Despite a burst of customer wins recently, Infinera got 60 percent of its 2006 revenues from Level 3 Communications Inc. (NYSE: LVLT), a deal announced in May 2005. That situation should pass eventually; Infinera's S-1 says the company has scored 25 customer wins as of Feb. 15. (See Infinera Reaches Level 3, XO Selects Infinera, and Infinera Muscles Into Interoute.)

Details such as the number of shares to be offered, or the price, haven't been penciled in yet. For the purposes of calculating a registration fee, the company's paperwork lists its "maximum proposed aggregate offering price" of $150 million.

Goldman Sachs & Co. is Infinera's lead underwriter, joined by Citigroup , JPMorgan Partners , Lehman Brothers , and Thomas Weisel Partners .

Aside from the numbers, the S-1 reveals a bit of Sarbanes-Oxley trouble, in the form of a "material weakness" in the way Infinera valued its inventory. The S-1 says the weakness has been corrected. Separately, and perhaps unrelated, Infinera swapped out its CFO in June, around the time it was presumed to be planning an IPO. (See Infinera's CFO Quits.)

Another interesting tidbit: The S-1 says Infinera got sued last year by Cheetah Omni LLC of Ann Arbor, Mich., over two patents -- Nos. 6,795,605 ("Micromechanical Optical Switch") and 7,142,347 ("Method and system for processing photonic systems using semiconductor devices").

Both patents are credited to Mohammed Islam, a professor at the University of Michigan whose research group has spun out startups including Xtera Communications Inc. (Nasdaq: XCOM)

Infinera's largest shareholders are Advanced Equities Inc. and Kleiner Perkins Caufield & Byers , the S-1 says. Each holds roughly 6.4 million shares, for a 9.3 percent stake. Mobius Venture Capital and RWI Ventures , respectively holding 7.8 and 5 percent, are the next largest shareholders.

The largest employee/director shareholder is chairman and CEO Jagdeep Singh, with 3.2 million shares, or 4.5 percent.

— Craig Matsumoto, West Coast Editor, Light Reading

tmc1 12/5/2012 | 3:12:46 PM
re: IPO Alert: Infinera Files Its S-1 sailboat,

I agree and that is why I said that the SEC might want to talk to ninja. If he has friends/relatives at Infinera or works there they would really like him to shut up at this point.

I also don't believe that they have multiple un-announced wins at Tier 1 carriers. Maybe some trials at this point.

^Eagle^ 12/5/2012 | 3:12:48 PM
re: IPO Alert: Infinera Files Its S-1 interesting.

as someone who has 20yrs working with T1 carriers, for the "contractor" deployment teams to know about would imply a lot.

Before "contractor" teams would ever be let into this kind of change, LOTS of things have to happen at the carriers:

deep lab trials, first office trials, first live traffice field trials, product approval cycles by all parts of the carrier decision making team,.... and then training all the 1st level CO managers and CO technicians on the platform for OAM and configuration software. Transmission engineers / network planning staff would need the new platforms from Infinera put into their architechture planning and purchasing tools.

ONLY then would sub-contractors be called in... only after lots of links had already been deployed carrying live traffic on the platforms.

I would be VERY surprised if Infinera has made it this far with those carriers and not made associated press releases! If it were true, then all that noise about the cash flow from Infinera would go away and the IPO would probably double or triple in value.

Therefore, if they were this far along (as per ninja.. all those carriers will be using Infinera to carry traffice by Q4 and press releases will happen accordingly) why would they not divulge this as part of the IPO.

So, my conclusions: one of the below:

a) ninja has no clue
b) ninja has deep insider connections and knows things that he should not be divulging
c) ninja has deep insider connections at certain carriers... and NO they would not be the "sub-contractor" installation crews.. those guys would be the last to know.. he or she would need to have very deep contacts inside carrier high level decision makers and if that is so.. then ninja is at a minimum violating their trust.. or perphaps breaking an NDA.

I am not sure which of the above is true.

I don't see Nortel, ALU, Fujitsu, Ciena, Huawei, Marconi/Ericsson, or Siemens or Tellabs abandoning their dwdm platforms! And I am sure those companies have deeper ties to the major carriers than ninja or infinera.

Therefore, it is clear to me something doesn't add up.

It is obvious Infinera needs the cash. The other stuff sure seems like hype to me.

imho

sailboat
ahwnn 12/5/2012 | 3:12:49 PM
re: IPO Alert: Infinera Files Its S-1 I am just wondering if there are any highly probably grants that have been issued to those outside if Infinera, who have not invested in the company as individuals. I was asked to look as discounting revenues in an analysis based on potential weaknesses with existing clients.

Thanks for the help
whyiswhy 12/5/2012 | 3:12:51 PM
re: IPO Alert: Infinera Files Its S-1 Ahwnn

Yes, asked and answered. 5% of the common is the figure, I believe. See earlier messages.

Just like the good old days.

-Why
voipexpat 12/5/2012 | 3:12:55 PM
re: IPO Alert: Infinera Files Its S-1 Ninja Turtle, I would double check your sources info....
ahwnn 12/5/2012 | 3:12:55 PM
re: IPO Alert: Infinera Files Its S-1 Are there any rumors out there on specific individuals(if anyone), that work for carriers who may be testing the gear, that Infinera has given stock options to? I am just curious if we are back to the Sycamore and Corvis days, grease the CTO and get an order.
ninjaturtle 12/5/2012 | 3:12:56 PM
re: IPO Alert: Infinera Files Its S-1 BTW...If you read the S-1 they claim 25 customers and identify ~ 10. They are not obligated to reveal unannounced customers in their S-1.
ninjaturtle 12/5/2012 | 3:12:56 PM
re: IPO Alert: Infinera Files Its S-1 yes my sources are the carriers. Friends that work in deployment teams that see and know what is going into the network builds over the next 6-12 months. Telco is a small world in the deployment area where contractors are used to balance out the workload spikes during installs.
tmc1 12/5/2012 | 3:12:56 PM
re: IPO Alert: Infinera Files Its S-1 ninjaturtle,

If you or your reliable sources are working for Infinera then this is big trouble as you are either pumping the stock falsely or revealing information that is not available to the general public. Either way the SEC would be very interested to talk to you and your "sources".

If you are just making this up or you are getting ALL of your info from the carriers themselves then it is probably legal but questionable.



whyiswhy 12/5/2012 | 3:12:57 PM
re: IPO Alert: Infinera Files Its S-1 = trict, ninjaturtle...

Are those names Freudian or what?!

ROTFLMAO!

-Why
paolo.franzoi 12/5/2012 | 3:12:57 PM
re: IPO Alert: Infinera Files Its S-1
Interesting that these contracts would not be considered "material" to an IPO.

seven
Stevery 12/5/2012 | 3:12:57 PM
re: IPO Alert: Infinera Files Its S-1 Once the IPO is officially announced and launched you will see the likes of AT&T, Sprint, and Verizon all be announced as customers. I would quess these carriers would be running live traffic by Q4. Infinera should show its potential as an investment vehicle within that timeframe.

How altruistic of the investors to share the bump in valuation that will occur with those announcements! Such nice people, they're always trying to create value for unknown people in the public markets.
investorlogic 12/5/2012 | 3:12:58 PM
re: IPO Alert: Infinera Files Its S-1 "Based on very reliable sources, Tier 1 carriers are locked and loaded. Once the IPO is officially announced and launched you will see the likes of AT&T, Sprint, and Verizon all be announced as customers"

Ninja Turtle - obviously your reliable sources are not in the telecom industry.




ninjaturtle 12/5/2012 | 3:12:58 PM
re: IPO Alert: Infinera Files Its S-1 Having been out of the country for the past 4 weeks and no internet access (by design) coming home yesterday to read this news was interesting to say the least. As usual, many view points on Infinera. Infinera is certainly a lighting rod and creating a lot of buzz for many readers.

Based on very reliable sources, Tier 1 carriers are locked and loaded. Once the IPO is officially announced and launched you will see the likes of AT&T, Sprint, and Verizon all be announced as customers. I would quess these carriers would be running live traffic by Q4. Infinera should show its potential as an investment vehicle within that timeframe. In addition, 2008 should be a huge year for Infinera and their ability to help these companies expand their much-needed expansions into fiber. Also, look for 2008 to see 400G line cards to be introduced as well.

JMHO...
deauxfaux 12/5/2012 | 3:12:59 PM
re: IPO Alert: Infinera Files Its S-1 Press releases from manufacturers touting "how great they're doing" are certainly rare in this business. You would do well to understand the entire context of their statements, rather than allowing yourself to fall inside the event horizon of Infinera's MARCOM group.

Think about it, if Infinera really has "35% of the 10G market" (paraphrasing here), then as they complete their takeover of the world, they will be about ~3 times bigger than they are today ($150M)....not a very exciting business.

So either; A) the investors are nuts (throwing a $300M to build a $150M business), B) the MARCOM guys spun you around a few times, C) you work there and are just doing a little chest beating for fun, or D) B&C

My vote is "D"



Pete Baldwin 12/5/2012 | 3:12:59 PM
re: IPO Alert: Infinera Files Its S-1 Re: % of the long haul market ... we had a bit of controversy with that in the past ...

http://www.lightreading.com/bo...
trict 12/5/2012 | 3:13:00 PM
re: IPO Alert: Infinera Files Its S-1 Noticed this press release. 35% of the 10g long haul market. A growing share of a growing market? That does sound bad!
http://www.infinera.com/news/2...

trict 12/5/2012 | 3:13:03 PM
re: IPO Alert: Infinera Files Its S-1 Tier 1 telcos can't in the US can not buy from "small" private companies. A company needs to be public before it can pen deals with the T1s.
Google is offering online software are they not,need bandwidth do we not read about rumored relationships between them and Infinera? Humm.
The IPO will be good, the follow on will be even better. Infinera market cap 2 billion plus in 24 months after IPO. Don't bet against it. Oh and didn't Quest buy OnFiber (I read that here) which gives them access to Infinera technology through the back door? Keep your money in your wallets if you will, but I would be happy to bet on Jagdeep Singh and the Infinera team. Too smart, too good to bet against.

Balet 12/5/2012 | 3:13:03 PM
re: IPO Alert: Infinera Files Its S-1 I believe they made a couple of useful M&As recently. I think they are moving in right directions.
They can have a pretty good solution for 40G and 100 G by the time the employees can sell their stocks if they move fast.
Balet 12/5/2012 | 3:13:05 PM
re: IPO Alert: Infinera Files Its S-1 As far as we can see from a supplier side, Infinera is doing very well.
Certainly, a very strong and smart team, which will make it, probably much better than their neighbors from PA.
Mr. Mutt 12/5/2012 | 3:13:05 PM
re: IPO Alert: Infinera Files Its S-1 Infinera (I still think 'Zepton') has had this ora about them for a while. We've heard about how they'll revolutionize the world, and maybe they are doing it and maybe they aren't. As a privately funded company, the outside world was left to wonder what was going on and spend lines and lines of dialogue on LR about it...

But that's all about to change...

Going public, IMO, is a big risk in this market. You see tech companies looking to go PRIVATE because the scrutiny of being a public company often times dictates you do the best for your stock price, not for the company. Infinera has benefited by being a private company and doing everything under the radar. As a public company, they're going to have to tell everyone about the good (new deals, etc) AND the bad (revenue, or lack thereof!).

It seems odd Infinera would choose to go public in a market that has a LOT of capital in the private equity space willing to spend... My guess is their current investors are tired of waiting and want to cash out at whatever they can right now. I see a mild IPO, followed by a slow decline in stock until they get bought.
materialgirl 12/5/2012 | 3:13:06 PM
re: IPO Alert: Infinera Files Its S-1 Dear Seven:
Perhaps the VSOE mention implies that INFN is doing something new and different with their system, say in muxing signals via their OEO conversions, coupled with their OAM software. Perhaps they plan to charge for this but first need to establish a track record of value.
trict 12/5/2012 | 3:13:06 PM
re: IPO Alert: Infinera Files Its S-1 When would you expect the Infinera officers to begin making the rounds of the inventment houses? (End of this quarter or sooner?)
Then we will have real answers
paolo.franzoi 12/5/2012 | 3:13:06 PM
re: IPO Alert: Infinera Files Its S-1
OEO environments that mux signals and OAM software already exist.

There are potentially LOTS of reasons for them to have deferred revenue. They need to tell us. I think speculating is just that. No point in guessing. If they want investors, they will have to tell us.

seven
whyiswhy 12/5/2012 | 3:13:07 PM
re: IPO Alert: Infinera Files Its S-1 IMHO:

The deferred revenue is most likely part of a ongoing contract which includes "everything".

The reason it is deferred is some percentage of it has yet to ship. The most likely GM from those deferred sales is the one they have been realizing to date.

IOW, there is not enough GM here to break cash positive. Just like almost everyone else in the sector.

The way I would put it is: they just finished selling their technology (kudos to all), now they have to sell the company (just when they thought they could take a break).

Selling the company means there has to be at least a good chance of strong net positive cash flow in the foreseeable future. But in this case, that's at best a chicken and egg problem.

I for one don't see it happening; the strong net positve cash flow in the near future, that is. At best, INF might achieve a weak positive cash flow, by slashing and burning R&D, sales, marketing, etc. I'm not interested nor impressed with MBA (management by accountants).

-Why
paolo.franzoi 12/5/2012 | 3:13:08 PM
re: IPO Alert: Infinera Files Its S-1
why,

Your description is the kind of sale that everyone wants. However, lets say to get a sale that Ininera has to develop some new features. This creates risk in being able to get paid and not having the equipment ripped out. Given that, the auditors may require that revenue not be recognized until all contracted development items are completed. The auditors can maintain that stance even if a letter of product acceptance is obtained, the product is paid for, service is turned up, and further orders are placed.

If you want to go defend your financials to the SEC when your auditors disagree with whether you can take revenue, be my guest. I, for one, will not be doing so. It is a risk assessment on the auditor's part and their incentive is to tell you to not take revenue.

VSOE should not be a problem for an optical transport system as their product resembles the 20 other optical transport systems that have already been made and sold for a decade.

seven
whyiswhy 12/5/2012 | 3:13:09 PM
re: IPO Alert: Infinera Files Its S-1 VSOE: There really is no mystery in the concept of revenue or cost or what or when to recognize: the answer is always follow the cash.

Systems are sold with a warranty on the throughput and uptime of the hardware (and software). They are also sold with a service contract stipulating the cost of service item by item.

Performance less than that contracted comes out of the hardware providers pocket, and that is downside. Damage during install, or flooding, that sort of thing, tailoring of software, lead to service revenue, and that is income. The service contact can be listed as deferred revenue, but it may never be recognized. There should hpowever also be a discussion of the potential exposure due to warranty claims.

-Why
deauxfaux 12/5/2012 | 3:13:09 PM
re: IPO Alert: Infinera Files Its S-1 Actually MG, the "hard costs" of material purchases and fabrication MAY be included, but to the extent that wafer fabrication (the KEY part of Infinera's technology) is period costed or allocated to R&D would make any cost figures of the PICs a guess. Furthermore, depending on the cycle times in the fab, it is possible to arrive at any CoGS number you wish to justify.

You are also missing a few points...not the least of which is the amount of accrual for installation, warranty, certain upgrades contemplated in the purchase agreements, etc. None of these costs will be included until the revenue is recognized.

You are certainly right about the software...but only to the extent that the system is unbundled....and Infinera is a solution provider on its own hardware, so the chances of unbundling the software are nil.

Follow the cash.
trict 12/5/2012 | 3:13:10 PM
re: IPO Alert: Infinera Files Its S-1 materialgirl
That is what I was going to say. (yeah right)
That is a good insight. Thanks
materialgirl 12/5/2012 | 3:13:10 PM
re: IPO Alert: Infinera Files Its S-1 The GM mystery probably lies in their VSOE (Vendor Specific Objective Evidence) of value problem. SONS had a problem with this, as did the analysts who follow the company.

In a new new market, if you are selling something that has no historic value, you cannot recognize revenue on it because it lacks VSOE. In the INFN case, as with SONS, the VSOE-effected parts seem to be software and service, the high-margin parts of the system.

Only after a history of value has been developed, can these revenues be recognized. Hence, they do recognize "all the costs under the factory roof" when they ship a box, but none of the "good stuff". That would explain the gross margin gap. It also implies that those deferred revenues have a high margin attached.
deauxfaux 12/5/2012 | 3:13:11 PM
re: IPO Alert: Infinera Files Its S-1 Actually, thats not the way the process works at all. The process STARTS with the filing of an S-1, and as the SEC comments, and responses are filed, you will see S-1/A (Amendment) docs filed in response.

If, by "cleaner" you mean the use of non-GAAP accounting, then "caveat emptor."

Follow the cash....
paolo.franzoi 12/5/2012 | 3:13:11 PM
re: IPO Alert: Infinera Files Its S-1
I think df and I are telling everyone is that the focus on Income Statements by the sell side analysts and reporters is greatly overdone. It is a wonderful and convenient encapsulation of many things. But I implore all of you to read the Cash Flow Statement and the Balance Sheet prior to investing in anything.

seven
trict 12/5/2012 | 3:13:12 PM
re: IPO Alert: Infinera Files Its S-1 I think you will find the SEC has given all the financial a real going over BEFORE the S1 was filed. The reality of Infinera will be apparent to all when they begin making presentation to the investment community and they can define the numbers in a much cleaner way. Then we will know if they are a boom or a bust. (My guess is boom!)
FTTHsoon 12/5/2012 | 3:13:14 PM
re: IPO Alert: Infinera Files Its S-1 Pretty sure that's what the S-1 is indented to do. I would hope the SEC would do their job. As far as investors only time will tell. ThatGÇÖs what quarterly statements are all about. Let's just let it run the course. No one knows what will happen in the next 6-24 months. Lets just hope we are all around to see whatever happens everywhere.
OSXman 12/5/2012 | 3:13:14 PM
re: IPO Alert: Infinera Files Its S-1 Whether Infinera gets another two years or not is all about whether they can convince investors to pony up cash.

I think this S-1 will get a very thorough going over by the SEC.
deauxfaux 12/5/2012 | 3:13:14 PM
re: IPO Alert: Infinera Files Its S-1 "According to all the Engineers turned CPA"

Some of us have formal training in engineering and finance (accounting is the "mathematics" of finance).

".....on this thread Infinera is doomed"

No, Infinera is not doomed as long as there are investors ready, willing and able to provide it with more cash, since it is currently incapable of generating cash.

"I think the best way to approach this issue is to see how they do over the next 2 years."

At a declining burn rate, it will cost new investors $100-150M to answer this question....got your checkbook handy?

"I simply wish them good luck"

As do I, I have quite a few professional friends there....but I won't be buying the IPO.
paolo.franzoi 12/5/2012 | 3:13:14 PM
re: IPO Alert: Infinera Files Its S-1
OSX,

There claim about the revenue was there was some status change at some customer. That certainly could have been negotiated around the IPO. I think you and I are in agreement that looking at the income statement with that much deferred revenue just makes the company hard to read. I wish there was more history of actual revenue business and I would be happier just sticking to the cash flow statement and balance sheet.

seven
FTTHsoon 12/5/2012 | 3:13:15 PM
re: IPO Alert: Infinera Files Its S-1 According to all the Engineers turned CPA on this thread Infinera is doomed. I think the best way to approach this issue is to see how they do over the next 2 years. That will reveal where they stand within the transport space and the financial world. An S-1 is a snapshot of where they are today. Goodness knows I haven't been able to predict the future. If you can you are a fool to wasting your time discussing anything on Lightreading's website.

Let's see how they roll. I am sure a lot of people have worked extremely hard at Infinera over the past 6 years. I simply wish them good luck. Their technology seems extremely promising and sounds revolutionary at a time when everyone else is selling the same old DWDM product using off the shelf components.
OSXman 12/5/2012 | 3:13:15 PM
re: IPO Alert: Infinera Files Its S-1 You're right, the p.33 discussion is illuminating.

I believe that this may be what is happening. The company agrees to a relatively indeterminate period of unspecified support for a fixed price. This revenue is recognized ratably over the LONGEST POSSIBLE DELIVERY PERIOD. That is what is called GAAP conservatism. This period was an average of 3.7 years. In Q4:06 they SHORTENED this period to 1.3 years. This meant they could ACCELERATE the revenue recognition period from 3.7 years to 1.3 years. In essence, they are taking the same amount of revenue and recognizing it almost three times as fast. Hence, the big revenue pop. Gee, do you think it might be related to showing better numbers for a pending IPO? Nah...

Note that the company says "Product support services consist of software warranty, updates and unspecified upgrades and product support." I think a lot of these ESTIMATED COSTS are in deferred inventories. If not, then it's even worse because they aren't accruing for estimated costs.
OSXman 12/5/2012 | 3:13:15 PM
re: IPO Alert: Infinera Files Its S-1 Seven,

To the extent that expenses can be associated with revenues, I believe they must be.

In the case of Infinera you will see a large deferred revenue line item of $100mm. You will also see a deferred inventory asset of $63mm. I haven't done the work here, but my guess is that as the deferred revenue is recognized as actual revenue, the deferred inventory will be recognized as cost of goods sold. Theoretically, there is $40mm of deferred gross margin, but it isn't at all clear if there will be more expenses as the revenue is recognized which would eat into that margin.

These are complex financials and it is not at all clear to me why they cannot recognize the revenue. I suspect it relates to software requirements but I am not sure. One can simplify, as one poster did, to say they are losing money hand over fist, but to figure out exactly how much money they are losing is complex.

In my mind, the key accounts will the the inventory and particularly the deferred inventory accounts. Deferred inventory can have also sorts of estimates in there which, if they turn out to be wrong, could dramatically effect profitability.
paolo.franzoi 12/5/2012 | 3:13:25 PM
re: IPO Alert: Infinera Files Its S-1
df,

Ah, the beauty of SOX-404 shines on you my friend.

seven
deauxfaux 12/5/2012 | 3:13:25 PM
re: IPO Alert: Infinera Files Its S-1 As one poster pointed out, the objective of cost accounting are to match expenses and revenue in the periods in which they occur. Unfortunately, this is much less easier said than done, especially in a wafer fab where allocations of cost can have any interpretation that is convenient. How much of the fab is "R&D" or period costed independent of production output? If you made the argument that 90% of the fab had some sort of experimental work going on that impaired the value of the output for the purposes of valuing WIP and FGI, you could reach a very low COGS. Reverse the allocation, and the opposite is true.

The simple truth is that all accounting methods are biased, even Activity Based Costing. The only defense you have in evaluating financial results is an understanding of the biases inherent in the accounting methods being used. But because this true of ANY measurement system to some degree or another, we all know the importance of careful measurements and estimation of experimental error. The same is true of accounting

Revenue recognition is governed by a pretty vague rule: "revenue is to recognized when the substantial burden of collection is relieved."

This implies that revenue is recognized when a company is nearly 100% sure that it is going to get paid. In the simplest case, a new, working product is shipped to a customer that has a historical track record of accepting the same product without modification, and paying for it 30 or so days later. Revenue is recognized at shipment

In the worst case, the customer is buying a new product, which has never been proven to work in its intended application (has not been proven its "implied merchantability and fitness") for which the customer is allowed to withold payment and/or have return priveleges. For this case, revenue could not be recognized until payment had been received, and all of the contingencies had been cleared....quite possibly long after payment had been received.

Anything can happen in between these two scenarios, but I would ask you this; would a startup hungry to go public look to push the edge of the revenue recognition envelope or be ultra conservative? My guess is that they are recognizing revenue as aggressively as possible.

My advice? Forget about the cost accounting, and follow the cash....it is always closest to the truth.
paolo.franzoi 12/5/2012 | 3:13:30 PM
re: IPO Alert: Infinera Files Its S-1
Stevery,

You are clearly not up on the latest revenue recognition rules. You can ship, receive acceptance letters for, and get payment for items that can not be included as revenue. It all has to do with whether there is functionality promised but not yet delivered.

seven
paolo.franzoi 12/5/2012 | 3:13:30 PM
re: IPO Alert: Infinera Files Its S-1
And to all of you,

Since all of this negative margin gear has shipped, you best go explain the positive gross margin in Q4.

Seems that the product itself IS being sold at a total positive gross margin and that there is some reason that cost is being taken when the product is being made. Whether this is 100% of the system or for what reason, I do not know.

You all have a very incorrect view of revenue recognition under Sarbanes-Oxley. My view would be (if I were a CFO) to put a roadmap on every box I shipped. Then I would declare that revenue will ALWAYS be 0 and that one can figure it out from cash flow and the balance sheet. The income statement is the biggest bunch of voodoo in accounting. Not a single number on it is black or white. Accruals, Warranty Reserves, Inventory Buydowns, Revenue Recognitions - all of it. If you invest in any business based on this bullcrap, you are a victim of financial engineering. Go ye to the Cash Flow Statement.

seven

Stevery 12/5/2012 | 3:13:31 PM
re: IPO Alert: Infinera Files Its S-1 Some analysis on Infinera and Level(3) relationship...

http://chip.seekingalpha.com/a...


interesting. I had not appreciated that infinera had to give away more than 5% of the company to L-3 in order to get a PO out of them.

Wasn't this the Wilcom/Sycamore/MattBross M.O.?
fiber_r_us 12/5/2012 | 3:13:32 PM
re: IPO Alert: Infinera Files Its S-1 Some analysis on Infinera and Level(3) relationship...

http://chip.seekingalpha.com/a...
litereading 12/5/2012 | 3:13:33 PM
re: IPO Alert: Infinera Files Its S-1 Brook,

My sense is initially, INFN sold chassis, CE, and perhaps blades below costs, with the expectation of future lower cost on the blades due to volume and design CR. Yes, this is a typical strategy. INFN is not unique.

I never said the entire product is negative margin. Q4 positive GM makes me think they've achieved considerable success in reducing costs, and blades are very likely positive margin. Are margins on new blade sales at levels to make INFN EBT positive going forward? Don't know. All the while competition isn't standing still.

The release of Q4 deferred revenue was most likely because they renogiated a large contract (probably L(3)) ending or reducing the term of free sw upgrade and support. 5 years free support was killing them rev rec. Can't do that under 97-2 (probably why they have a new CFO).

$110 deferred rev is product and service - it is being recognized ratably over the balance of the term of the service arrangement. Still cash is in on 2/3rds of this revenue.

The fundamental point that I have been making is not about profitability, but about cash flow. Engineers struggle understanding this point. INFN is not cash positive - if/when they achieve that point goes a long way in determining if/when they are a success.
optiplayer 12/5/2012 | 3:13:34 PM
re: IPO Alert: Infinera Files Its S-1 "The deferred income is contracted support (plus training, which is probably small $$). This is of course the part of the contract that is most easily renegotiated with a company that has few telco customers.
The reason for it being deferred is that it is not tangible, and the price is easily renegotiated, so in honor of past accounting scams there are GAAP rules on its recognition."

While I agree with your characterization of what is likely deferred your rationale for why this type of revenue is deferred is wrong. It has nothing to do with "tangibility" or potential for re-negotiation but has to do with matching revenue and cost. If a company signs a 4 year service and software upgrade contract they cannot recognize all the revenue up front but must apportion it over the 4 years.

It is unlike to be re-negotiated... this is just more anti-Infinera spin.
optiplayer 12/5/2012 | 3:13:34 PM
re: IPO Alert: Infinera Files Its S-1 "Revenue from future sales of "blades" is very likely to come in with negative margin too. Level(3) and other carriers almost always negotiate prices for what it takes to fully populate a system in the original discussions. It would be difficult for me to see a carrier taking cheap gear up front and then paying obscene prices later on upgrades/services. They are not that stupid. The whole multi-year package is negotiated up-front."

Of course prices for all components of a system are negotiated up front but, without exception in my experience, line cards ALWAYS have higher margin than chassis/commons. Infinera is no exception. This is true for access systems, cross-connects, transport systems, etc. Listen to a conference calls for Ciena, Tellabs or any other major gear supplier and you will always hear discussion of product mix and its impact on margin and the mix of chassis to line cards is a significant factor in GM.
optodoofus 12/5/2012 | 3:13:34 PM
re: IPO Alert: Infinera Files Its S-1 > So, lets use an example. Infinera seeds its
> customers by selling chassis below cost. Whoops
> cost taken. The revenue with blades (above cost
> is defered). Get it now? This is a absolutely
> typical sales strategy.

Seven,

You, sir, are no accountant. While the strategy you describe is a common sales strategy (sell the commons cheap to reduce start-up cost, make additional margins later as more line cards are added), this has nothing to do with deferred revenue. Revenue is deferred if the sale has been made but there are revenue recognition issues. As previously described, this could be because the product sold is service, which must be recognized as it is consumed. Also, it could be because Infinera promised some future features as a contingency of the sale. When this occurs, the revenue cannot be recognized until those features are delivered. Revenue deferral is not an optional thing, and it is not something that companies enjoy at all.

optodoofus
fiber_r_us 12/5/2012 | 3:13:35 PM
re: IPO Alert: Infinera Files Its S-1 Revenue from future sales of "blades" is very likely to come in with negative margin too. Level(3) and other carriers almost always negotiate prices for what it takes to fully populate a system in the original discussions. It would be difficult for me to see a carrier taking cheap gear up front and then paying obscene prices later on upgrades/services. They are not that stupid. The whole multi-year package is negotiated up-front.
Stevery 12/5/2012 | 3:13:35 PM
re: IPO Alert: Infinera Files Its S-1 Seven-
The deferred income is not blades. That would become revenue (and cost) in the quarter in which it is booked.
The deferred income is contracted support (plus training, which is probably small $$). This is of course the part of the contract that is most easily renegotiated with a company that has few telco customers.
The reason for it being deferred is that it is not tangible, and the price is easily renegotiated, so in honor of past accounting scams there are GAAP rules on its recognition.
Any analyst who believes that the quoted deferred numbers will be collected is probably on the take.

The net-net is that this company is not making money on its technology, but claims its going to make money supporting it.

Steve
PS. The discussion under the rev table on pg 33 is illuminating regarding their deferred revenue, if you read between the lines.
paolo.franzoi 12/5/2012 | 3:13:35 PM
re: IPO Alert: Infinera Files Its S-1
lite,

You also need to then explain the positive margin in Q4 when $40M of deferred revenue recognize drove positive margin and then see if what I said makes sense. In your mind, the entire product is negative margin, thus the situation should get worse as more revenue comes in. Which is not supported by the S-1.

seven
paolo.franzoi 12/5/2012 | 3:13:35 PM
re: IPO Alert: Infinera Files Its S-1
lite,

So, lets use an example. Infinera seeds its customers by selling chassis below cost. Whoops cost taken. The revenue with blades (above cost is defered). Get it now? This is a absolutely typical sales strategy.

seven
litereading 12/5/2012 | 3:13:38 PM
re: IPO Alert: Infinera Files Its S-1 Cost must match revenue, except when there is a known loss. INFN sold (sells?) initial systems at below cost, so had to take the loss when they shipped initial systems. Deferred revenue results from bundling equipment and sw/services (post contract support) on one contract/PO (profit center). Being a new company, they have not establish fair market value for their products or services, so they have to take revenue for product and services over the term of the services contract. Looks like this is training, tech support and sw upgrades. They release cost when they release revenues - GAAP. Cash is different, net 30 or whatever they agreed to. How much cash will the $110M of deferred revenue bring in? It appears most of that cash has been received - and spent. $29M cash on hand plus $32M of receivables - they burned thru $65M last year and their burn rate probably accelerated. Less than a year's worth of cash available, plus they have notes due. Why do an IPO? Simple, the VC's have put in all the cash they intend to and are expecting ROI on what they've put in. Bottomline is, INFN needs cash to survive until they can generate positive cash flow from operations. The number one reason a new company fails is because they run out of cash.

my 2 cents.
trict 12/5/2012 | 3:13:40 PM
re: IPO Alert: Infinera Files Its S-1 The Q1 07 numbers will be very interesting.
paolo.franzoi 12/5/2012 | 3:13:40 PM
re: IPO Alert: Infinera Files Its S-1 Revenue and cost of revenue are not at all linked in the same quarter in many many circumstances per accounting standards.

Very often costs will be accounted for in the quarter they occur. Generally, this is not a big deal because only a small portion of revenue is deferred. But in Infinera's case, it seems over 50% of revenue is deferred.

seven

BBBoa 12/5/2012 | 3:13:41 PM
re: IPO Alert: Infinera Files Its S-1 I somewhat agree with the statement, "I think there is value in Infinera's technology". However, in addition to cutting edge, unique technology that actually works, there MUST be a sustainable market environment for the technology in question. If the market is weak for the technology, is there truly "value"?

If you look at Jim Duffy's article in Network World (Feb 19th issue, page 8), as well as, several other independent research reports, it appears there's still a substantial fiber glut; thus obviating the need, in most cases, for DWDM systems. Case in point - "...carrier revenue on wavelength services to deliver such content is expected to stay relatively flat since bandwidth supply remains plentiful." - Insight Research

Certainly, Infinera's revenues to date are minimally respectable for a privately company. But, for the general public and fund managers, I just don't see the net income, margin or any sort of appreciable growth - and thus, the appetite for an investor to look at this as a long term, or even short term growth investment. C'mon, how many of you out there can honestly say you'd take a position in this company and park it in your 401K for any amount of time?

Are there any system's companies making hundreds of millions or billions in the DWDM market?

Just my $0.02

BBBoa
[email protected] 12/5/2012 | 3:13:42 PM
re: IPO Alert: Infinera Files Its S-1 Hi Sailboat

Thanks for the reply (education). yes I am still headhunting. ChipStaff is the company I work out of.

Best wishes

Dave

^Eagle^ 12/5/2012 | 3:13:42 PM
re: IPO Alert: Infinera Files Its S-1 Dave,

don't get me wrong. I think there is value in Infinera's technology. But it is a mix of some InP integration (array's of detectors and lasers / modulators) along with some original thinking and elegance at a systems level. Fundamentally this is a systems play. they have a nice solution for some kinds of links. but not a ubiquitous replacement for all the other DWDM systems out there that have better performance for many kinds of links. I wish Infinera well on their IPO. It would be good overall for the industry I think. I have some doubts about it, but those are based on the financials that have been widely discussed on this board.

Regards Luxtera, from what I can see from the press releases, they have very interesting technology. But on some levels I see them pursuing a crowded field with their new entry into PON devices using their CMOS platform. I wonder if the applications space they were pursuing is taking too long to mature, hence the decision to jump into PON. My issue with PON customer premise optics is that it seems like a race to the bottom in terms of both price and margins. Too many players with too many technology platforms from simple TO can based TOSA / ROSA to PLC based approaches like NeoPhotonic and others are pursuing to what Xponent and Enablence is doing, to Luxtera's approach.

I am intrigued by their earlier stated applications: optical bus technology for high speed devices (10G x 10 or 20 optical lanes is far faster than the standard electrical bus used in most high end servers and other computing platforms).

I think Luxtera has a great team. But wonder about when the market will be ready for the optical bus stuff. This market could be gigantic.

I wonder as well as the original work they were doing on making an optical gyro monolithically in a CMOS chip. That could be very interesting device integrated into on board automotive navigation systems.

Makes me think the recent PON decision was to find some revenue as I am guessing the other markets are not maturing as fast as they would like. On the other hand, if their secret sauce reallly gives them a competitive advantage on pricing, then they may just have a winner. TBD. CMOS processes certainly could be a huge cost advantage if they figure out a low cost package to go with the OSA.

sailboat.

p.s. Dave: are you still doing recruiting? or are you into something else now?
[email protected] 12/5/2012 | 3:13:43 PM
re: IPO Alert: Infinera Files Its S-1 Sailboat

Thanks for teh enlightened answer. How would you contrast the Luxtera technology. Is there real value there?
whyiswhy 12/5/2012 | 3:13:44 PM
re: IPO Alert: Infinera Files Its S-1 Optiplayer:

I hold zero personal animosity for the leadership team at Infinera.

That's not to say I don't hold the actions of some of them in contempt, it's just that it's not personal, as in irrational or prejudiced or "grudge". It's based on their actions, not the color of their hair or whether they like me or I like them.

I have said before and repeat: I have several friends over there whom I have known many years, respect highly, and would happily hire, work with or for in the future. I also said a long time ago the dream of high yield low cost highly integrated monolithic anything was crazy and would auger in.

They scrubbed a few VCs clean, no big woop, part of the game, more power to 'em.

That money is gone, now they want to scrub the public. Big woop.

As always, JMHO.

-Why
optiplayer 12/5/2012 | 3:13:44 PM
re: IPO Alert: Infinera Files Its S-1 "There is a huge amount of deffered revenue that is keeping apparent gross margin very negative. "

Are you implying that they recognized cost associated with the deferred revenue but not the revenue itself? This is highly unlikely as accounting standards require that costs and revenue be recognized in the same period (there are exceptions but they tend to be rare).

While I think there is far too much negativity on this board, particularly from why who obviously has some personnel animosity toward the leadership team at Infinera, the S-1 was far uglier than I expected. 7% GM in Q4 despite a massive increase in revenue, high opex and extreme customer concentration (looks like Sycamore circa 2000) are all flashing red to me.

It will be interesting to see how the NASDAQ holds up in the next few months or many of the IPOs in the pipeline may have to be shelved.
trict 12/5/2012 | 3:13:44 PM
re: IPO Alert: Infinera Files Its S-1 Even in China!
fiber_r_us 12/5/2012 | 3:13:44 PM
re: IPO Alert: Infinera Files Its S-1 Wow.. who would have thought Infinera's S1 would have such an impact on the market! :)
paolo.franzoi 12/5/2012 | 3:13:45 PM
re: IPO Alert: Infinera Files Its S-1 I am not sure what S-1 you guys have been reading, but Gross Margin was positive in Q4. There is a huge amount of deffered revenue that is keeping apparent gross margin very negative. The big revenue gain in Q4 is that they were able to recognize $40M of past shippments. According to the S-1, they Shipped $140M of equipment last year and recognized $53M in revenue.

I have not gone back and calculated their actual margins and net income but it will be a LOT better than the posted Income Statement.

seven
whyiswhy 12/5/2012 | 3:13:46 PM
re: IPO Alert: Infinera Files Its S-1 Trict:

Q: "What does the market cap figure come out to for the 150 million they are looking for?"

A: What do you think it should be for a company that can only take market share by continuuing to sell below margin, meaning they will NEVER break even?

I'd say $149 million at most.

I wish all the worker bees nothing but the best, the rest deserve to eat the fruits of their garden.

-Why
trict 12/5/2012 | 3:13:46 PM
re: IPO Alert: Infinera Files Its S-1 What does the market cap figure come out to for the 150 million they are looking for?
^Eagle^ 12/5/2012 | 3:13:46 PM
re: IPO Alert: Infinera Files Its S-1 Erbium 210:

While I understand your enthusiasm, some corrections to perception are in order.

1st, Infinera has almost nothing to contribute to the Intel research into making an optical bus.

lets talk about their mighty InP technology advantage.

They make an array of detectors. 1 chip. they make an array of EML's on DWDM wavelenghts. Well, if you look at Santur's tunable laser, they make an array of DFBs. Not too far a leap for an array of EML's.

Those two arrays are the only part of their pict that is monolithically integrated. The rest of it is simply smart hybrid integration that anyone with 300M in investment could EASILY duplicate. They use an off the shelf mux/demux based on AWG. So, the mux is not part of the pict monolithic design. They pick off the incoming signals from the array of detectors and shunt them over to standard electronics for massaging, retiming, reshaping. They do have some small amount of special sauce in how they do this, but it is not monolithic. OFF the shelf electronics. After the cleaning up of the signal and the associated performance monitoring, the re-inject the signal into their array of transmitters. They are reach limited based on their technology. They use commercial dispersion compensation and EDFA to make sure they even reach 80-100km.

So their basic technology advantage from the InP platform is limited. What they do have is some genius for integration and for taking a somewhat fresh systems approach.

While I think they are a great company and will probably do OK in an IPO (lots of hype, lots of press, lots of mystical belief in them), I do not think their technology is all that "groundbreaking".

What they have could rather easily be duplicated by anyone with a couple hundred million to spend.

I do wish them luck and want them to succeed. I simply want to point out that Infinera is a systems play! Not a fundamental earth shattering technological InP breakthrough.

sailboat
erbium210 12/5/2012 | 3:13:47 PM
re: IPO Alert: Infinera Files Its S-1 I don't really see the need for this company to shut it's doors and call it quits. Per the S1, the company went from $0 to $150 mil in annual revenue within 2 years. I see strong growth from a young company within a sector that was nearly desimated a few years back. There is much value in their InP technology. Companies are investing heavily in R&D to develop silicon based photonics. I wonder what value Intel would place on a working photonics circuit for optical BUS technology? $1 Bil in R&D savings??
fiber_r_us 12/5/2012 | 3:13:47 PM
re: IPO Alert: Infinera Files Its S-1 Ultimately, Infinera will have a difficult time improving margins. Other major vendors have continuesd to improve their products over the years. Other vendor's gear is actually cheaper to build. At least one major vendor's newer systems eliminate dispersion compensation and simplify the optical line system dramatically, while maintainting 2000km unregenerated reaches. No amount of InP integration at terminals and regenerators will make as much cost difference as that.

For new bids, when Infinera tries to improve its margins above negative, other vendors will simply become the "low price leader" while maintaining postive margins. The other vendors will not let Infinera significantly improve their margins.

In existing installs, the price of all of the upgrades (new cards) to any installed system has already been negotiated at some really low (or negative) margin. So, even if Level(3) and the few others were to "max-out" their systems, it wouldn't be enough revenue/margin to save Infinera. Infinera had better raise a lot more than $150M in the IPO if they wish to stick around more than 2 more years.
litereading 12/5/2012 | 3:13:47 PM
re: IPO Alert: Infinera Files Its S-1 Their technology obviously works quite well or Level (3) wouldn't keep buying they product. INFN has proven they can grab market share by selling initial systems at or below cost. No magic so far. The question is can they become cash positive before their money runs out. They need the IPO to generate cash.
litereading 12/5/2012 | 3:13:48 PM
re: IPO Alert: Infinera Files Its S-1 Over two years INFN sold $173M (63M recognized + 110M deferred) on CoS of $166M (99M recongized + 67 deferred) making it 4%GM. They sold product essentially at cost. Doubtful they can increase prices, so they need to fill existing slots with higher margin line cards + reduce cost.

2H '06 ship rate was $107M. Assuming this is 1H '07 rate, they are spending 18% on R&D and 15% on SG&A - both respectable... 33%GM to break-even? Well, they got that ugly debt coming due...

But they burned $67M in cash last year; have $29M in cash & equivs, $33M in AR.... any wonder why an IPO?

Can INFN grow at the sake of competitors, rapidly reduce mfg cost, maintain SGA & R&D rates, and get enough cash from an IPO to reach profitability in 2-3 years?

whyiswhy 12/5/2012 | 3:13:48 PM
re: IPO Alert: Infinera Files Its S-1 Trict:

Growth rate of what, their burn?

Used to be the formula for getting more money (up rounds, IPO, etc) was to burn even faster and hotter. Just give away product, take back a purchase order, sprinkle liberally with options. All sides leveraged the IPO because even the crappiest spreadsheet crossed over at some point...and everyone "knew" the market for anything fiber optical was going to infinity!

That business plan-style ended in 2002, but some people took a long time to wake up to the fact: the greater fools.

At this point the ethical thing for the Infinera BOD to do would be to shut the place down, pay off their employees accrued vacation time, pay off their vendors, and give the remaining money (if any) back to the investors, to turn over to their limiteds.

Or they (the BOD consisting of the founders and the VCs) could throw it all down and file for an IPO...afterall, Barnum was and still is right.

-Why
leftbehind 12/5/2012 | 3:13:48 PM
re: IPO Alert: Infinera Files Its S-1 this analysis is exactly right, no choice but to IPO because cash is running out. Margins are difficult, but improved margins with no growth do not justify an IPO. There is simply not enough growth in the space to sustain the offering price against larger competitors with weaker technology.
To invest in this offering you have to beleive they can break out of their current run rate/product offering and generate some growth - you cannot rely on margin improvement alone with the numbers presented in the S1.
trict 12/5/2012 | 3:13:49 PM
re: IPO Alert: Infinera Files Its S-1 Is the concensus that this IPO will fall flat on it's face. Should Infinera just close the doors now?
Again I am not and expert but I think they booked 130 million in sales in 2006. L3 accounts for the bulk of the revenue BECAUSE they were the 1st to take delievery (re read light reading customer wins) and that is more then a year out thus it is counted as revenue. 2007 bet you a buck will be huge. 200M or more. Or I could be wrong but it will be fun to see what happens.
trict 12/5/2012 | 3:13:50 PM
re: IPO Alert: Infinera Files Its S-1 The cash burn rate is indeed high at Infinera, but so is the growth rate. It may be the IPO is required to pay for growth. Also, it may be the case that revenue deferred may be due to the SEC disallowing those sales to be posted as revenue because of warrenty requirements in force. (I am aware of that happening elsewhere.)
This I know, they have grown larger in terms of people and space then anyone not in that neighborhood is aware of. (also, expensive and not what you would do if you were struggling)


fiber_r_us 12/5/2012 | 3:13:50 PM
re: IPO Alert: Infinera Files Its S-1 Are unprofitable companies really going out to IPO?

Its the only choice. They will run out of money in a few months otherwise, and no one will by them with those financials.
Stevery 12/5/2012 | 3:13:50 PM
re: IPO Alert: Infinera Files Its S-1 That may be correct, what is the business on page 36 about? (deferred revenue 110M)

They have contracts with time components to them. Rather than recognize the revenue (and stick a whopping big entry under accounts receivable) they recognize the revenue gradually.

Given that their DWDM contract is probably not that different than any other, why the obfuscatory detail on ratable revenue? (Do other DWDM companies do this?) Also, how renegotiable is that revenue?

It looks like an attempt to say: We're not profitable, but look what we have in the pipeline! Buy our stock!

These are very tricky financials and will take a lot of time to understand.

I disagree. The financials are very straightforward. They're losing money hand over fist.

They had 67M in cash at the end of 05 and have about 30M now. They have another 20M in a credit line. So at the current rate of burn, they have 6 months to do the deal.

Again I wonder: Are unprofitable companies really going out to IPO?
whyiswhy 12/5/2012 | 3:13:50 PM
re: IPO Alert: Infinera Files Its S-1 I can't imagine anyone who would buy this but someone who owes KPCB a lot for past gains...

KPCB might be able to reach out and strong arm / guilt their Kieretsu aka pawn it off, but I for one will cease doing business with same.

Infinera = Avanex, lack of net-wise

JMHO

-Why
deauxfaux 12/5/2012 | 3:13:50 PM
re: IPO Alert: Infinera Files Its S-1 Venture financed companies almost never take down financing rounds smaller than 1 year's worth of runway and by the looks of Infinera's financials, a year of runway would cost their existing syndicate $75-100M. The balance sheet clearly shows that they must take down a big chunk of cash within 90 days or so, and I can't imagine that the venture syndicate could stomach the price that a lead investment syndicate would offer.

Think about it....in addition to the minimum size check size ($30M?) there would be a huge stack of liquidation preferences to deal with along with along with a god-only-knows-what-else in preferred to common share conversion before anyone makes a nickel.

Given these issues, and the fact that the financials are not strong enough to support a "normal" IPO makes the situation smack of desperation.

....but that doesn't mean that Goldman won't be able to pawn it off on weak minded PMs
OSXman 12/5/2012 | 3:13:51 PM
re: IPO Alert: Infinera Files Its S-1 These are very tricky financials and will take a lot of time to understand.

There are considerable deferred revenues and deferred expenses, and net income becomes very much a function of the assumptions used. The large incremental revenue growth in Q4 was due at least partly to a shortening of the assumed contract life or something like that.

trict 12/5/2012 | 3:13:51 PM
re: IPO Alert: Infinera Files Its S-1 Complex for sure. It does seem like they have a viable product and the sales appear very strong. Now if thay can make some margins...
trict 12/5/2012 | 3:13:51 PM
re: IPO Alert: Infinera Files Its S-1 That may be correct, what is the business on page 36 about? (deferred revenue 110M)
Stevery 12/5/2012 | 3:13:51 PM
re: IPO Alert: Infinera Files Its S-1 Craig, I am no expert but I looked at that S1 for a few minutes and I think they are cash flow positive as of Q4 - 06. Or I could be all wet.

Let me offer you a towel. :)

It's only positive on a gross basis. Once you include operating expenses, they lost $24M in Q4-06. (I'm looking at the table on pg 45.) But the good news is that they cut the loss down from $28M in the previous quarter. What a business!

Is wall street really taking massively unprofitable companies to IPO again?

The question investors might like answered is why they have 2 outstanding gagging contracts. But of course, no one would answer that without violating them. :)
trict 12/5/2012 | 3:13:52 PM
re: IPO Alert: Infinera Files Its S-1 Craig, I am no expert but I looked at that S1 for a few minutes and I think they are cash flow positive as of Q4 - 06. Or I could be all wet.
Pete Baldwin 12/5/2012 | 3:13:53 PM
re: IPO Alert: Infinera Files Its S-1 So, what's the over/under on when Infinera breaks even?
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE