Last week's big announcement from Infinera was all about the company's planned Transmode acquisition, but CFO Brad Feller also dropped a tantalizing nugget for those wondering if the optical vendor can keep up its run of strong quarterly earnings reports.
We'll all find out for sure next week when Infinera Corp. (Nasdaq: INFN) reports first quarter 2015 earnings on April 21, but if you just can't handle the suspense, Feller's got you covered. After discussing financial details of the deal during last week's conference call, Feller offered a brief Q1 update: "For the first quarter, we expect revenues slightly above our guidance mid-point of $185 million. We also expect both gross margin and operating margin, and EPS to be higher than [previous] guidance."
Michael Genovese, managing director of MKM Partners, wrote in a research note after the call, "This means GM [gross margin] of at least 46%, OM [operating margin] of at least 9% and EPS greater than $0.12. We would not be surprised to see ~47% GM, double-digit OM. and EPS in the neighborhood of $0.15. We also expect the 2Q15 revenue guidance will be quite strong, and think the 2Q15 margin guidance will likely be solid but conservative (i.e., consistent with last two quarter's guides).”
Infinera has built a nice track record in recent quarters of beating expectations and increasing financial metrics on all fronts, helped by a steady stream of business from Internet content providers and other non-telco customers. (See Infinera Strategy Pays Off, Stock Soars, Infinera Reports 'Exceptional Year' Earnings and Infinera Beats Sector Blues With Revenue Jump, Bright Outlook.)
Infinera's most recent big win in that arena was Facebook , which is using the vendor's DTN-X in its European network. Though it is not yet clear when Infinera will realize any new revenue from Facebook, company official no doubt will be quizzed on the Facebook deal during next week's earnings call. Oh, and there will probably be a little more discussion of that Transmode Systems AB deal, too. (See Optical Feels the Facebook Effect, Infinera's Big Customer Reveal: Facebook and Infinera Makes $350M Offer for Sweden's Transmode.)
— Dan O'Shea, Managing Editor, Light Reading