Infinera Looks to Rise Above Capex Concerns

For once, Infinera isn't being chastised for its failure to win a contract with AT&T or Verizon.

The vendor, which is scheduled to report third-quarter earnings this Wednesday afternoon after markets close, doesn't count the two biggest US telcos as customers, and has been telling anyone who will listen that it's doing just fine without those engagements. (See Infinera: We're Fine, Thanks… and Analyst: Infinera Loses VZ Deal to AlcaLu.)

Now, as other vendors have been issuing lowered revenue guidance in connection with softer spending by carriers -- AT&T Inc. (NYSE: T) in particular -- Infinera Corp. (Nasdaq: INFN) may get a chance to separate itself from that crowd and distance itself from lingering criticisms by posting a healthy earnings report. (See Capex Crunch Hits EZchip and Ciena's Smith: Revenue Dip Short-Term.)

MKM Partners Managing Director Michael Genovese thinks that could happen this week. He wrote in a research note that he expects an "in-line-to-slightly-better 3Q14 numbers and an in-line 4Q14 outlook," adding, "the fact Infinera does not sell to AT&T or Verizon looks to be working in the company's favor currently."

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That fourth-quarter outlook, however, for now is expected to feature sequentially lower revenue as major Infinera customers such as CenturyLink Inc. (NYSE: CTL) and Level 3 Communications Inc. (NYSE: LVLT) come off of mid-year network upgrade projects.

Still, there's always a chance the web content giants with which Infinera and others have been having increasing success could deliver a fourth-quarter Christmas gift in the form of additional business, Genovese wrote. The "Web Titan" customers, as Genovese called the group consisting of Google, Amazon, Facebook and Microsoft, among others, has helped sustain the 100G optical market this year, he said. (See Infinera Confirms Level 3 Deal and Optical Vendors Optimistic Despite Shrinking Market.)

— Dan O'Shea, Managing Editor, Light Reading

rgrutza600 10/21/2014 | 11:35:13 AM
Swimming upstream It would be quite remarkable if they could escape the fate of Juniper, Ciena and Cisco with respect to a revenues drop for Q4.  Analysts are currently expecting $160 for Q4.
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