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Optical/IP

Infinera in optimistic mood after solid Q3

Infinera reported higher revenue of $340.2 million for the third quarter to September 27, 2020, beating consensus estimates of $336 million and above the year-ago level of $325.3 million.

According to Briley Securities, sales of 600G products continue to ramp, as port shipments doubled on a quarterly basis from a small base.

Light it up: Infinera's future outlook is bright following higher than expected revenues in Q3. (Source: Shahadat Rahman on Unsplash)
Light it up: Infinera's future outlook is bright following higher than expected revenues in Q3. (Source: Shahadat Rahman on Unsplash)

"The company added seven new 600G customers in Q3, resulting in 23 total customers, including a major [Internet content provider/ICP]. We expect this ICP to be one of the major catalysts going forward," Briley said.

Briley also noted that the sales outlook of $340 million to $370 million for the fourth quarter compares with a consensus estimate of $357 million. In addition, Briley said the Q4 operating margin is expected to be 3.0%, "above our estimate of +2.5%."

In Q3, the operating margin for the quarter was 2.2% compared to -1.8% in the second quarter of 2020 and -5.7% in the third quarter of 2019.

Leading light

Infinera, a 2020 Leading Lights Awards winner for its "potentially market-leading optical/IP/Ethernet product," provided a bullish assessment of the recent third quarter.

David Heard, the current chief operating officer who is due to succeed Tim Fallon as CEO by the end of 2020, described Q3 as "very strong ... achieving non-GAAP operating profitability with non-GAAP revenue, gross margin and operating margin growing both sequentially and year-over-year."


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"We remain focused on the opportunity to grow our market share, expand margins and drive earnings growth through innovation and operational execution," he said.

Fallon added he continues to be "very optimistic about the opportunities ahead of us that are created as the industry transitions to 800G, open optical networks and intelligent pluggables."

"These transitions are happening in a healthier competitive environment where vertical integration and assurance of network security are increasingly valued."

The company posted a smaller net loss for the third quarter of $35.9 million compared to net losses of $61.6 million in Q2 2020 and $84.8 million in Q3 2019.

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— Anne Morris, contributing editor, special to Light Reading

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