INFN

[la-onda]

on my watchlist 

Infinera Boosts Lead in Key Market Segment
Tuesday , April 08, 2008 13:37ET

SUNNYVALE, Calif., April 8, 2008 (PRIME NEWSWIRE) -- Infinera (Nasdaq:INFN) confirmed its rapid emergence as a leader in the optical networking market by taking first place for the full year 2007 in a new study of the North American multi-reach DWDM market, and taking fourth place worldwide in that market segment.

According to the new report on the optical networking market released by independent research firm Ovum RHK, Infinera led the North American multi-reach DWDM (dense wavelength-division multiplexing) market in 2007 with a 28% share, compared to 21% in 2006 and just 1% in 2005. Last year was the first year in which Infinera led this market segment. Nokia Siemens and Ciena took second and third place respectively. According to Ovum's global data, Infinera ranked fourth worldwide in 2007, with a 13% share, compared to 9% in 2006 and just 1% in 2005. Infinera invoice shipments in 2007 were $309 million, up 112% over the 2006 level of $146 million, substantially exceeding total market growth of 24% in 2007.

"The company's rise has been spectacular given we have not seen run rates over $200 million from any core DWDM vendor since the bubble in 2001," said Ron Kline, Research Director, Optical Networks at Ovum. "Infinera's quick rise in North America is attributed to solid year over year revenue growth that pushed its rolling 4-quarter total to over $230 million." Multi-reach DWDM is the Ovum RHK category for backbone DWDM optical networking systems that include next generation features such as integrated wavelength switching and suitability for multiple applications spanning metro core, regional, long-haul and ultra-long-haul networks.

Infinera not only grew in revenue and customer reach, it expanded its market breadth with important customer wins in all of its targeted customer segments. In 2007, Infinera:

* ...announced significant additions to its core market of wholesale
   carriers, including new customers Deltacom, Integra Telecom,
   360networks, and FPL Fibernet.

* ...made significant gains in the cable sector, supplying four of
   the five largest cable companies in North America, also announcing
   a nationwide long-haul network for Cox Communications.

* ...announced new customers in the independent telecom sector
   including Telekenex in California and MidAtlantic Broadband
   Cooperative in Virginia.

* ...extended its reach in the research, education, and government
   market with wins at BOREAS-Net and the state of New Mexico, while
   continuing to support Internet2 as it built out its nationwide and
   metro networks offering connectivity to more than 200 academic and
   government Internet2 members.

* ...established itself as a major provider of optical networks to
   Internet content companies, a relatively new category of networks
   experiencing rapid growth in bandwidth needs. Infinera's Internet
   content customers include Equinix, an international provider of
   connectivity to many popular video websites, and OVH, which is
   France's largest web-hosting company.

"Infinera has gone from a new market entrant to number one in North America in three years because our unique architecture-Digital Optical Networks based on large-scale photonic integration-gives our customers benefits and competitive advantages that cannot be achieved with traditional DWDM architectures," said Infinera CEO Jagdeep Singh. "The system's speed and flexibility of deployment, ease of operation, and ability to rapidly turn up new capacity enable service providers to deliver differentiated services and compete more effectively in the telecom services market."

International Progress

On the international side of the business, Infinera's growth last year was driven by new customers including the North China Grid Company, France's OVH, German regional carrier EWETEL, and leading British ISP, Carphone Warehouse.

"When we launched our product, the Infinera DTN, in 2004, we began by targeting the U.S. market first. We have since been expanding our international sales and support capability and as a result have seen increasing penetration of the market globally. We look forward to continued growth internationally," said Mr. Singh.

Rapid Market Growth

According to the latest Ovum data, the optical networking market grew by 24% in 2007 to reach a total of $14.95 billion in worldwide revenue, the fastest annual growth rate since 2000. Worldwide shipments in the multi-reach DWDM segment grew by 51% to $2.3 billion.

"Market growth accelerated in 2007 as carriers worldwide increased spending to keep up with unprecedented demand for core bandwidth capacity from video, IP data, and wireless backhaul applications," said Mr. Kline. "Growth was up in all regions and given the current level of RFP activity the market shows no signs of easing."

The Infinera DTN is the first optical system based on photonic integrated circuits which integrate more than 60 optical devices on a pair of chips. Integration produces significant benefits in terms of cost, space consumption, power consumption, reliability, and scalability. Infinera has leveraged its breakthroughs in photonic integration with an optical system and software to create a network architecture, Bandwidth Virtualization(tm), which puts a minimum of 100 Gigabits/second of capacity throughout the network on day one, and makes it extremely simple and cost-effective for service providers to rapidly provision and reconfigure that capacity, and gain competitive advantage in supplying bandwidth services to their customers.

The Infinera DTN is a Digital ROADM for long-haul and metro core networks, combining high-capacity DWDM transport, integrated digital bandwidth management, and GMPLS-powered service intelligence in a single platform.

Chart:

[la-onda]

short squeeze will be coming soon...

INFN: Short Interest DN 0.8% to 4.3M at the End of Mar 2008
Wednesday, April 09, 2008 16:18ET

According to new short interest data from NASDAQ, short interest for Infinera Corp (NasdaqNM: INFN) DECREASED 0.8% to 4,254,779 shares as reported at month-end March, 2008.

Based on INFN's 20-day average daily share volume of 518,040, it would require approximately 9 day(s) of buying to cover this short interest.

[tokyopua]

short squeeze will be coming soon...

INFN: Short Interest DN 0.8% to 4.3M at the End of Mar 2008
Wednesday, April 09, 2008 16:18ET

According to new short interest data from NASDAQ, short interest for Infinera Corp (NasdaqNM: INFN) DECREASED 0.8% to 4,254,779 shares as reported at month-end March, 2008.

Based on INFN's 20-day average daily share volume of 518,040, it would require approximately 9 day(s) of buying to cover this short interest.

Does look good La-onda.  Good balance sheet, good news, strong short interest, 50 sma clearly acting as support nearby now, its on watch.  Are you already in?

[la-onda]

INFN: Sanders Morris Starts @ Buy; Sets Tgt @ $15; Analyst Notes
Thursday , April 10, 2008 09:34ET

Issuer: Infinera Corp (NasdaqNM: INFN)
Analyst Firm:  Sanders Morris Harris Group
Ratings Action: INITIATE
Current Rating: Buy
Target Price Action: INITIATE
Target Price: $15.00
Analyst Comments: The firm believes solid carrier spend on optical infrastructure upgrades and share gains will drive near-term revenue growth.

[la-onda]

very bullish chart imho
still holding and waiting for the short squeeze coming with earnings above expectations!
( in @ 12.91)
cheers
Oliver

INFN: Volume Spike; 85% > 20-adsv, Stock +9.46%
Wednesday, April 16, 2008 16:45ET

This is the 1st VOLUME alert for INFN in the past 7 calendar days.

Trading for Infinera Corp (NASDAQ NM: INFN) has been heavier than usual in today's session. By 16:45 ET, the stock had already traded 1,015,047 shares via 4,037 trades. The cumulative volume is 85.18% above its 20-day average of 548,155. Normally the stock experiences around 2,642 individual trades per session.

So far, today's volume surge has caused a net rise in INFN's stock price. At the time of this alert, the stock was trading at $13.660, up $1.180 (+9.46%).

Ten months ago, the Company's shares closed at $19.705. The price has declined more than 30 percent since then.

Over the last 10 trading session INFN has traded in a range between $11.720 and $13.150 and is currently trading 54.47% below its 52-week high of $30.000 set on June 18,2007 and 64.98% above its 52-week low of $8.280 from January 23,2008.

In the previous 3 sessions, INFN trading has displayed a mixed trend. Closing results have been as follows:

April 15, 2008 --- closed at $12.480 up $0.250 (+2.04%) on 466,600 shares
April 14, 2008 --- closed at $12.230 down $0.080 (-0.65%) on 622,800 shares
April 11, 2008 --- closed at $12.310 down $0.660 (-5.09%) on 558,300 shares

The Company has not released news in the past 30 days

INFINERA CORP
The Company provides Digital Optical Networking systems to telecommunications carriers worldwide.

[la-onda]

Bulgartel Builds Nationwide Bulgarian Network With Infinera
Thursday , April 17, 2008 12:33ET

SUNNYVALE, CA -- (MARKET WIRE) -- 04/17/08 -- Bulgarian telecom carrier Bulgartel has selected the Infinera (NASDAQ: INFN) Digital Optical Networking system for a nationwide Bulgarian optical network. The new network will enable Bulgartel to provide greater capacity and new services to its customers within Bulgaria and to customers requiring international connectivity, as Bulgaria becomes an increasingly important hub for international communications. System integrator SmartCom Bulgaria AD is providing support services for the new network.

Bulgartel offers wavelength, SDH, and IP services on its network. Bulgartel has experienced growth in bandwidth demand in excess of 100 percent a year, driven by rapid growth in broadband penetration among consumers, increasing use of IP networks by the corporate sector, and fast-growing Internet traffic traveling from Western Europe to the Middle East and Asia. Growing Internet use in the Middle East and Central Asia is driving more IP traffic through Bulgaria and Turkey, the main communications crossroads linking those markets to Western Europe. Within Bulgaria, broadband penetration to the home is growing rapidly, driven by low subscription charges and widespread availability of access connections. Rising prosperity today is enabling more and more consumers to subscribe to Internet services.

Bulgartel chose Infinera because Infinera's Bandwidth Virtualization(TM) architecture enables Bulgartel to install and configure circuits quickly and cost-effectively in a range of protocols and bit rates including Gigabit Ethernet, 10 Gigabit Ethernet, and SDH, from STM-1 to STM-64. In addition, the simplicity and ease of operation of the Infinera system allows Bulgartel to deploy the network with a much smaller team of optical experts than would be possible with a traditional DWDM (dense wavelength-division multiplexing) optical system.

"We chose Infinera because it fits perfectly our company strategy for responding to customer service requests with the best quality and the fastest response time. Growing competition in the Bulgarian market requires Bulgartel to adopt the most competitive technologies and marketing policies. So we have chosen to start with the implementation of a state of the art technology, Infinera's digital optical networking systems," said Dimitar Bambov, CEO of Bulgartel.

"The Bulgarian telecom market is highly competitive, and the large-scale photonic integration of the Infinera DTN system gives Bulgartel a competitive advantage empowering Bulgartel to offer a range of new high-capacity services," commented Bisser Ivanov, managing director of SmartCom Bulgaria AD, a system integrator based in Sofia, Bulgaria, that provides nationwide design, implementation, and support services to Bulgartel.

"We are very pleased to support Bulgartel with a new Infinera network," said Infinera CEO Jagdeep Singh. "Bulgaria is a vibrant, fast-growing market, open to new ideas and new technologies, which makes Infinera's Digital Optical Networks a great fit."

The Infinera DTN is a Digital ROADM for long-haul and metro core networks based on large-scale photonic integrated circuits, combining high-capacity DWDM transport, integrated digital bandwidth management, and GMPLS-powered service intelligence in a single platform.

[la-onda]

 
INFN: Volume Spike; 45% > 20-adsv, Stock +7.09%
Friday , April 18, 2008 14:25ET

This is the 2nd VOLUME alert for INFN in the past 7 calendar days.

Trading for Infinera Corp (NASDAQ NM: INFN) has been heavier than usual in today's session. By 14:25 ET, the stock had already traded 842,279 shares via 2,887 trades. The cumulative volume is 44.63% above its 20-day average of 582,360. Normally the stock experiences around 2,863 individual trades per session.

So far, today's volume surge has caused a net rise in INFN's stock price. At the time of this alert, the stock was trading at $15.250, up $1.010 (+7.09%).

Ten months ago, the Company's shares closed at $19.705. The price has declined more than 22 percent since then.

Over the last 10 trading session INFN has traded in a range between $11.720 and $14.300 and is currently trading 49.17% below its 52-week high of $30.000 set on June 18,2007 and 84.18% above its 52-week low of $8.280 from January 23,2008.

In the previous 3 sessions, INFN trading has displayed a positive trend. Closing results have been as follows:

April 17, 2008 --- closed at $14.240 up $0.580 (+4.25%) on 857,400 shares
April 16, 2008 --- closed at $13.660 up $1.180 (+9.46%) on 1,015,000 shares
April 15, 2008 --- closed at $12.480 up $0.250 (+2.04%) on 466,600 shares

[la-onda]

awesome, as expected from my side !
Infinera Corporation Reports First Quarter Financial Results
Tuesday , April 22, 2008 16:09ET

SUNNYVALE, CA -- (MARKET WIRE) -- 04/22/08 -- Infinera Corporation (NASDAQ: INFN), a leading provider of digital optical communications systems, today released financial results for the first quarter ended March 29, 2008.

GAAP Results:

--  GAAP revenues for the first quarter of 2008 were $138.3 million
    compared to $76.1 million in the fourth quarter of 2007 and $49.2 million
    in the first quarter of 2007.
--  GAAP gross margins were 45% in the first quarter of 2008 compared to
    36% in the fourth quarter of 2007 and 24% in the first quarter of 2007.
--  Including non-cash stock-based compensation and warrant valuation
    expenses, GAAP net income was $27.6 million, or $0.29 per diluted share, in
    the first quarter of 2008 compared to a GAAP net loss of $3.9 million, or
    $0.04 per share, in the fourth quarter of 2007 and a GAAP net loss of $19.8
    million, or $2.62 per share, in the first quarter of 2007.
   

Invoiced Shipment Results:

--  Invoiced shipments for the first quarter of 2008 were $95.5 million
    compared to $93.4 million in the fourth quarter of 2007 and $66.7 million
    in the first quarter of 2007, representing growth of 2% from the prior
    quarter and 43% from the first quarter of 2007.
--  Gross margins on a non-GAAP invoiced shipments basis, excluding non-
    cash stock-based compensation, were 45% in the first quarter of 2008
    compared to 47% in the fourth quarter of 2007 and 35% in the first quarter
    of 2007.
--  Excluding non-cash stock-based compensation and warrant valuation
    expenses, the net income on a non-GAAP invoiced shipments basis was $12.6
    million, or $0.13 per diluted share, for the first quarter of 2008 compared
    to $15.9 million, or $0.17 per diluted share, in the fourth quarter of 2007
    and a net loss of $5.4 million, or $0.71 per share, in the first quarter of
    2007.
   

Management Commentary

"Our first quarter results represent another strong performance for Infinera and continued validation of our unique approach to optical networks," said Jagdeep Singh, president and chief executive officer of Infinera. "Our business model continued to perform well in the March quarter with expanded new customer footprint, global penetration, sustained profitability and strong cash flow generation. We believe that the tangible economic advantages we deliver to carriers continue to resonate in each of the growing markets that we address."

Singh noted several first quarter performance highlights:

-- For the second consecutive quarter, four customers accounted for 10% or
    greater of Q1 invoiced shipments. Shipments to Level 3 increased from
    Q4 levels to 31% of Q1 invoiced shipments, while Cox Communications,
    Interoute and XO Communications rounded out the list of largest
    customers in Q1.  One year ago, the company had two 10% or greater
    customers, with our largest customer accounting for 57% of invoiced
    shipments.

-- Two new customers were added in the first quarter, bringing the
    customer base to 42 (taking into account the merger of two pre-existing
    customers in the first quarter).

-- Infinera's rapid emergence as a leader in the optical networking market
    was affirmed by two recently released independent reports:
    -- Ovum RHK indicated that  Infinera took first place for the full year
       2007 in the  North American multi-reach DWDM market with a 28
       percent share and fourth place worldwide in that segment with a 13
       percent share.
    -- Independent analyst firm Heavy Reading's report "Photonic
       Integration & The Future of Optical Networking" named Photonic
       Integration the "best hope" for network scalability and cited
       Infinera as the "undisputed leader" in photonic integration
       technology.

-- Infinera  announced several  important advances in photonic
    integration, including:
    -- The first roadmap for the Infinera photonic integrated circuit,
       indicating that the company believes it is feasible to achieve a
       doubling of capacity per chip approximately every three years.
    -- A PIC demonstration that integrated ten wavelengths of data at 40
       Gigabits/second (Gb/s) per wavelength for an aggregate data rate of
       400 Gb/s.
    -- Demonstration of a ten-channel PIC with integrated SOAs that
       transmitted error-free data in the 1490 nanometer range of the
       S-band without external dispersion compensation.

INFN: Q1 Adj EPS 13c vs (71c) Beats 5c Est
Tuesday , April 22, 2008 16:12ET

QUARTER RESULTS
Infinera Corp (INFN) reported Q1 results ended March 2008. Q1 Revenues were $138.25M; +181.05% vs yr-ago; BEATING revenue consensus by +50.88%. Q1 EPS was 29c. Adjusted Q1 EPS was 13c; +118.31% vs yr-ago; BEATING earnings consensus by +160.00%.

Q1 RESULTS      Reported      Year-Ago     Y/Y Chg      Estimate    SURPRISE
----------  ------------  ------------  ----------  ------------  ----------
Revenues:       $138.25M       $49.19M    +181.05%       $91.63M     +50.88%
----------  ------------  ------------  ----------  ------------  ----------
EPS:                    29c                /A                  N/A               N/A                  N/A
Adj EPS:             13c               (71c)            +118.31%         5c             +160.00%
----------  ------------  ------------  ----------  ------------  ----------

[la-onda]

from INFN CC transcript:

Duston Williams will now provide a Q1 report and Q2 outlook. Duston.

I will review our Q1 actual results, provide an update to our VSOE status, and then follow that up with an outlook for Q2.

The following analysis of our Q1 results and results from other quarters and fiscal years is based on invoiced shipments and excludes non-GAAP stock-based compensation. Please see the GAAP to non-GAAP invoiced shipment reconciliation which is attached as an exhibit to today's earnings press release for a reconciliation of these results to our GAAP results.
Q1 was another quarter in which we outperformed our expectations and another quarter in which the business model demonstrated sustainable strong performance. Looking at the specifics for the quart er, invoiced shipments totaled $95.5 million versus $93.4 million in Q4. International sales were 18% of our invoiced shipments in Q1 versus 19% in Q4. In Q1 we once again had four 10% or greater customers on an invoiced shipment basis. As expected, Level 3 invoiced shipments increased significantly over Q4 and accounted for 31% of our Q1 invoiced shipments versus 17% in Q4.
Turning to gross margins, they were 45% in Q1 versus 47% in Q4. A slightly favorable product mix combined with cost improvements accounted for the better than expected gross margins.
Operating expenses for the quarter were $33.4 million versus $31.5 million in Q4. The quarter-over-quarter increase in spending was attributed to higher payroll, prototype, and lab trial equipment expenses, which were offset to some degree by lower commission expenses. Although operating expenses for the quarter did grow by about $2 million, they were lower than we expected. This delta was related to lower payroll, prototype, and miscellaneous expenses and we expect much of this variance to roll into Q2 spending.
Operating income for Q1 was $9.6 million versus $12.2 million in Q4. Other income and expense for Q1 was a favorable $4.2 million versus $3.9 million in Q4. The Q1 total included $0.9 million related to as set sales and F-Ex gains. Net income for the quarter was $12.6 million, or $0.13 per diluted share based on 96.7 million shares outstanding versus $15.9 million, or $0.17 per
diluted share in Q4.
Quickly turning to the balance sheet, cash, cash equivalents, restricted cash, and investments at the end of the quarter at $316.4 million versus $305.8 million in Q4. DSOs were 42 days versus 39 days in Q4. Inventory turns were 3.5 versus 3.4 in Q4. Accounts payable days came in at 42 days versus 32 days in Q4. And capital expenditures were $2.5 million in Q1 versus the $8.5 million in Q4.
I wanted to take a few minutes to provide an additional update on our attainment of VSOE. During our Q4 of January earnings call we announced that we had established VSOE for software subscription, a key component of our current service offerings and we were working to achieve VSOE for EFI services and training services. Furthermore, we stated that it was our goal to complete the process for these two services by Q4 of 2008. Today I am very pleased to announce that effective this current quarter, Q2 of 2008,

Infinera has completed the necessary steps to attain VSOE for these additional services.
As a result, starting Q2 of 2008 we will no longer need to ratably recognize product revenue for sales transactions where products are sold with these services. Product revenue from these transactions will be recognized upon acceptance and services revenue will be deferred as appropriate and recognized as services are delivered. We will continue to recognize a very small percentage, historically less than 3%, of our sales transactions on a ratable basis, related to a number of older customer contracts, which included non-standard service offerings.
As we continue to expand our customer base and the service offerings we provide, we may sell non-VSOE compliance services in connection with the sale of our product. In the event that we sell products in the future that are associated with such services, the revenue associated with such sales will be recognized ratably over the service peri od. This is consistent with any company reporting revenues under SOP 97.2.


Based on these developments, and in an effort to give investors a more complete vie w of the true economic performance of the Infinera business, the following reporting methodology will be utilized for Q2 through Q4 of 2008. All of this information will be summarized in the Investor Relations section of the Infinera web site shortly after the conclusion of this call.
Our quarterly results and guidance will be based on GAAP results. The only adjustment will be to subtract out the roll off of the ratable and product-deferred revenue and cost balances recorded on the balance shee t at the end of Q1 2008. This reflects sales and costs included as invoiced shipments in prior periods. For transparency and investor clarity, the adjustments to GAAP results for Q2 through Q4 2008 referenced above are estimated to be as follows. All of these adjustments will be a reduction to the reported GAAP results. The revenue adjustments for Q2 2008 will be $72.7 million, Q3 2008 $37.5 million, Q4 2008 $14 million.
The cost of goods sold adjustments for Q2 2008 $33.5 million, Q3 2008 $17 million, and Q4 2008 $4.8 million.

Looking to 2009, a majority of the pre-VSOE ratable product-deferred product and cost balances will have been recognized during 2008. Therefore, beginning Q1 2009 we will report results and issue guidance on a GAAP basis with no further adjustments. We believe that reporting our results on both a GAAP and invoiced shipment basis over the last several quarters has given investors a better understanding of the true economic performance of the company. Now that we have established VSOE for most of the services that we provide, we believe that GAAP, with the adjustments we outlined above, provides a clear understanding of our economic performance.
I also want to point out that the VSOE transition will cause our 2008 GAAP profits to increase significantly due to two factors: the increased up-front recognition of revenue in the current period, and the roll off o f the ratable and product-deferred revenue and cost balances already recorded on the balance sheet. The company has significant NOLs, approximately $240 million, to cover these accelerated GAAP profits. However, we will be subject to the minimum AMT tax of approximately 2% of pre-tax GAAP profits. Combined with various state and foreign taxes, this will result in an estimated 2008 tax provision of approximately 4% of pre-tax GAAP profits. In Q1 we booked a $1.2 million tax provision.
As we look forward to Q2, Infinera's business continues to perform quite well. Our business model continues to be validated with solid global customer penetration, sustained profitability, and strong cash flow generation. Our existing customers continue to be delighted with the Infinera experience, and from a new customer perspective we continue to win a large majority of the deals we compete for. Additionally, as Jagdeep mentioned, we are encouraged with our level of engagement with incumbent carriers worldwide.

Four quarters after becoming a public company, as we look forward, we are pleased with our overall performance and with our current position in the marketplace. As we have mentioned several times since our I PO, our quarter-over-quarter revenue growth can be influenced by several factors, reflecting the nature of our business, includ ing the timing of large customer deployments of Infinera gear, new product releases, the acquisition of new customers, and the mix of products.
In addition, our reportable GAAP results will be impacted to the extent that we provide  on-VSOE compliance services as part of the sale of our products to our customers in the future. We also can obviously be a ffected by overall market conditions. As a result, our quarter-over-quarter revenue growth may not always occur in a linear manner. Although the nature of our business lends itself to these occasional short-term ebbs and flows, as I mentioned above, we remain comfortable with our current and long-term positioning in the marketplace.

With that as background I would like to offer the following guidance for Q2, based on adjusted GAAP results, which excludes any non-GAAP stock-based compensation expenses. Revenue of approximately $88 million-$90 million. This assumes total GAAP revenues of $160.7  million-$162.7 million, reduced by the $72.7 million I discussed earlier for the amortization of the deferred revenue recorded on the balance sheet at the end of Q1 2008 which reflects sales included as invoiced shipments in prior periods.
Gross margins of 41%-42%; operating expenses of $36 million-$37 million; mid-income of $1 million-$2 million based on an estimated average diluted weighted shares outstanding of approximately 97 million. This would lead to an EPS of between $0.01-$0.02.

Before we open the call for questions I would like to indicate that we don't see any reason to change our 25% long-term revenue growth rate outlook for 2008 at this time, in either direction.

http://seekingalpha.com/article/73461-infinera-corp-q1-2008-earnings-call-transcript?source=yahoo

[David Randolph]

Hi la-onda, I have analysis here from Lehman Brothers, JP Morgan, Jefferies & Co and Thomas Weisel Partners. Let me copy/paste the one from JP Morgan, it's good enough



Infinera reported strong Q1 results with EPS a comfortable $0.08 above our estimates on both higher revenue and margins. However, Q2 revenue guidance pointed down q/q for the first time in 5 qtrs – we believe reflecting the inevitable lumpy nature of optical builds – since management reiterated guidance for 25% revenue growth in '08 and characterized its pipeline "as good as ever." With a mix shift to chasses and implied guidance that the non-LVLT customer base grows sharply in Q3 and Q4, we believe Infinera has good visibility into 2H and that optical demand remains strong keeping INFN one of our top picks. Reiterate Overweight.

• Invoiced revenue of $95.5M, up 2% q/q and 43% y/y, was $3.5M ahead of our $92M estimate and guidance of $90-92M.
• EPS (ex-stock comp) of $0.13 was a heady $0.08 above our $0.05 estimate – handily beating $0.03-0.04 guidance – as operating margin grew to 10.1%, a full 780 bps ahead of our estimate, reflecting higher revenue and lower opex.
• Level 3 grew to 31% of revenue, nearly doubling q/q as revenue from "other" customers declined 15% q/q, as per guidance.
• Management again reiterated it does not expect any customer to account for >20% of revenue in '08 AND that revenue grows 25%, implying that "non-Level 3" customers grow 44% in 2H by our estimate.
• Guidance calls for a q/q decline in rev and gross margin, reflecting both the lumpy nature of optical builds and a less favorable mix in Q2.
• Taking Q208 rev and EPS ests to $90M and $0.02 from $99.0M and $0.09, and '08 rev and EPS ests to $389.5M and $0.32 from $402M and $0.38, all ex-stock comp and reflecting Q2 lumpiness.



Investment Thesis & Conclusion

Infinera reported strong Q1 results with invoiced revenue of $95.5M, up 2% q/q and 43% y/y, $3.5M ahead of our $92M estimate and guidance of $90-92M. Meanwhile, EPS of $0.13 sailed $0.08 above our $0.05 estimate – yet again vastly exceeding $0.03-0.04 guidance – as gross margin of 45% was 300 bps ahead of our 42% estimate on record DLM shipments (versus record TAM shipments last quarter) and opex of $33.4M was a marked $3M below guidance of $36-37M, sending operating margin 780 bps above our forecast to 10.1%, down 300 bps q/q. See Table 1 below for EPS contribution by line item.



One Lump or Two? Q2 Revenue Guidance Brings Numbers Back to Earth
Q2 revenue guidance of $88-90M, however, represents a troubling 7% q/q decline, although we strongly believe the decline is purely due to the lumpy nature of optical builds with large customers rather than a sudden falloff in demand. Note that Infinera's top 4 customers this quarter made up a minimum of 61% of revenues, and, we estimate, quite likely could have accounted for as much as 75-80% increasing the impact that any one customer could do to topline.

Note also that instead of matching weaker Q2 guidance with lower '08 guidance, management essentially pushed revenue into 2H08 by keeping guidance for the full year steady at 25%. While this usually isn't a good omen, in this case when combined with the facts that Level 3 was 31% of revenue in Q1 – and we believe remains at a similar contribution level in Q2 – and that management again reiterated that it doesn't expect any customer to account for more than 20% of revenue in 2008, guidance implies that customers aside from Level 3 could grow 44% in 2H08 over 1H08 (see Table 2 below), leading us to believe management has much more visibility into revenue from customers aside from Level 3.



Pipeline "Good as Ever"

While it may be tempting to read a secular or macro slowdown into the lower Q2 guidance, we believe that optical demand and deployments remain strong, as management described the quality and quantity of its pipeline "as good as ever," and specifically called out – for the very first time – that it is pleased with its level of engagements with incumbent carriers worldwide (ie RBOCs and PTTs), implying there could be a sizable Tier 1 deployment in the foreseeable future.

We also note that chasses sales were near an all-time high while DLMs hit an all time high despite Level 3 accounting for 31% of revenue, implying that other customers – perhaps the other >10% customers mentioned such as Cox, Interoute, or XO Communications – are just ramping their builds since we believe Level 3 is towards the end of its deployment, also corroborated by the math in Table 2 above.
This leaves plenty of demand (and margin) as these customers come back to Infinera and order margin-rich TAMs to fill out the DLMs and chasses.

We believe the down gross margin guidance of 41-42%, down from 45% in Q1, implies that sales of the low-margin chasses products increase again next quarter which would only set Infinera up to receive future revenue as those chasses are filled with higher margin DLMs and TAMs.

All in, we continue to believe demand for optical transport remains strong – a point only corroborated by the management reiterating its full year '08 revenue guidance of 25% – and that Infinera's differentiated PIC solution is taking market share, which we expect to continue translating into margin expansion as customers come back to buy higher margin DLMs and TAMs after deploying common equipment. So while Infinera trades at a slight premium to Ciena at 3.2x EV to '08 revenue versus Ciena at 2.6x, we continue to like the story and the stock. Reiterate Overweight.

What We Liked

For the very first time, CEO Jagdeep Singh said he is pleased with the company's engagement with incumbent carriers worldwide, although Infinera has not announced an RBOC or PTT win to date, but potentially foreshadowing a large customer deployment at some point in the near future. CEO Singh also characterized Infinera's pipeline as "as good as ever." Note that Infinera achieved OSMINE last August 2007.

Gross margin of 45% was 300 bps above our 42% estimate, down just 180 bps q/q from Q4's 46.8% all time high when TAMs overshot plan by 30% and hit an alltime high.

Infinera achieved VSOE for services and training, again earlier than we expected and its goal of Q408, and expect to begin solely reporting GAAP revenue results beginning in 2009 after a transition for the next three quarters.

Q1 marked all-time peak for DLM shipments and was the second highest chasses quarter since Q406, boding well for future revenue and margin growth.

Infinera continues to have a solid balance sheet, with DSOs of 40 days by our calculation, up only slightly from 38 days in Q4, and inventory turns of 3.6x, relatively unchanged from 3.4x in Q4. Infinera generated $9.8M of cash from operations, down from $19M in Q4, bringing the company's total cash balance to $316M.

Infinera undershot its opex guidance for the 3rd quarter in a row implying that the company continues to keep a relatively tight lid on spending. However, after hiring 90 new employees this past quarter, growing headcount by a stunning 12.5%, we expect Q2 opex to be more in line with guidance. See Table 3 below.




What We Didn't Like

Guidance calls for Q2 revenue of $88-90M, down q/q for the first time in 5 quarters. While we hate to admit it, we knew it was inevitable for Infinera to see a down quarter given the lumpy nature of optical builds.

Infinera added 2 new customers (including another new content provider customer) in Q1 bringing the total customer count to 42 as two customers merged, slowing from its pace in Q4 when it added 3 customers. Clearly, the size of the customer is more important than the shear number of customers, so this may not imply Infinera has begun to tap out its potential customer base, but that it is moving to larger customers.

What Was a Mixed Bag

Level 3 grew to 31% of revenue in Q1 from 16% in Q4, nearly doubling q/q to $29.6M from $15.9M as revenue from other customers declined 15% q/q. Note that this was implied by guidance for LVLT to grow q/q on only slightly higher revenue (see Table 4). However, by our calculation and as described above guidance implies revenue from customers other than from Level 3 grows 44% in 2H08 over 1H08 (see Table 2 above).



Management reiterated F08 revenue guidance of 25% revenue growth, despite the decline in sequential guidance for Q2, pushing more revenue to 2H.

Guidance calls for gross margin of 41-42% in Q2, down from 45% in Q1, which could be a blessing in disguise if it implies the mix from lower margin chasses is increasing, since chasses sales pave the way for future sales of higher margin TAMs, and DLMs.

Quarter Review

Please see Table 5 below for a comparison of our estimates and reported results. Note that comparisons exclude stock compensation expense and are based on invoiced revenue.



Estimate Revisions

We are taking our Q208 revenue and EPS estimates to $90M and $0.02 from $99.0M and $0.09, including higher opex of $36.5M which drives our op margin forecast to 1.4% from 6.3%. For 2008, we are also lowering our revenue and EPS estimates to $389.5M and $0.32 from $402M and $0.38, all ex-stock comp and reflecting Q2 lumpiness. See Table 6 below for our estimate revisions.



Risks to our Rating

We believe there's a risk that Infinera's margins suffer more than we expect as it grows its customer base, since the company essentially "gives away" common equipment at no or a very small margin. In addition, a slowdown in demand either driven by the slowing macroeconomic environment or a potential deceleration of growth of network traffic could result in Infinera's revenue and earnings underperforming against our estimates, especially if existing customers do not purchase high margin TAMs to fill deployed systems. Last but not least, we believe there's a risk Infinera makes an acquisition given its $300M+ cash balance, resulting in disruption to the company and diverting management attention.

Valuation and Rating Analysis

We believe Infinera has one of the most innovative solutions for optical transport, one of the few bright spots in the telecom equipment market, based on its custom built PIC, or photonic integrated circuit, which provides it with a sustainable competitive advantage that is not easily replicated, allowing it to price more aggressive than it competitors who are beholden to a wide swath of discrete component manufacturers. We also believe the technology should drive gross
margins beyond the company's target 50% level, since TAMs, the modules that allow carriers to provide services to customers, carry as much as a 90% margin, paving a clear path to margin expansion. Infinera trades at 3.1x EV/revenue on our 2008 estimates, a premium to optical networking peer Ciena, the closest public company comparable in our opinion, which trades at 2.6x '08E, reflecting Infinera's prospects for rapid revenue growth and margin expansion, supporting our Overweight rating.

[la-onda]

sold with 1% profit instead of 26% 
back on my watchlist
thanks David

[la-onda]

nfinera Incumbent Question
APRIL 24, 2008

9:00 AM -- A funny thing happened during Infinera Corp. (Nasdaq: INFN - message board)'s recent earnings call. And no, I'm not talking about the missed guidance that sent its stock reeling. (See Infinera Profits, But Gives Lower Forecast and Infinera's Q2 Blues.)

Hidden in the call, in a blink-and-you'll-miss-it moment, CEO Jagdeep Singh just might have signaled that the company bagged its first big Tier 1 account.

While discussing company highlights, Singh told listeners on the call that the company saw traction in "important new segments, including with incumbent carriers worldwide."

It all sounds innocuous enough, or at least ambiguous enough, that some listeners might have missed it. For instance, Lehman Brothers analyst Inder Singh -- no relation to Jagdeep -- says he thought "incumbent carriers" referred to carriers that Infinera had already won deals with.

But when Light Reading asked how things were going on the Tier 1 front after earnings were released, here's what CEO had to say:

"We haven't publicly announced anything on the Tier 1 front. Actually, we call it the incumbent carrier front."

He used the phrase again later in the conversation when talking about segments of the market that Infinera could penetrate better:

"The places where we are under-penetrated, and that we would expect growth in share over time, are the incumbent carriers, international carriers, and to some extent the low-end metro."

That's not to say that Infinera has won anything yet. It's probably worth noting that the company is rumored to be in trials with BT Group plc (NYSE: BT - message board; London: BTA) -- although some analysts have their doubts. (See Is Infinera In at BT?)

[la-onda]

Infinera "equal weight," target price raised
04/24/08 - Lehman Brothers

NEW YORK, April 24 (newratings.com) - Analyst Inder M Singh of Lehman Brothers maintains his "equal weight" rating on Infinera Corp (INFN), while raising his estimates for the company. The target price has been raised from $15 to $16.

In a research note published yesterday, the analyst mentions that following robust 1Q results, the company has announced its revenue guidance for 2Q08 at $88-$90 million, short of the consensus. The granularity expected by some investors on a Tier 1 win was not provided and this may result in pressure on the company's share price, the analyst adds. The EPS estimate for 2008 has been raised from $0.28 to $0.31.

[la-onda]

Infinera Wins Key Approval for Chinese Market
Tuesday , May 27, 2008 13:20ET

BEIJING -- (MARKET WIRE) -- 05/27/08 -- Infinera (NASDAQ: INFN) announced today that China's Ministry of Industry and Information (MII) has issued a Network Access License to Infinera for the Infinera DTN. Obtaining this certification is an important requirement for the deployment of the Infinera DTN by China's public sector and private sector telecommunications carriers.

The MII license is a mandatory requirement for foreign-owned and Chinese-owned companies to ship equipment into the Chinese market and connect equipment to the Chinese telecommunications infrastructure. Each applicant must meet a series of requirements including rigorous product testing, live systems operation, documentation submission, and expert evaluation.

Over several months, Infinera passed all required tests and criteria, successfully demonstrating to MII the features and capabilities of the DTN. The Infinera DTN is a Digital ROADM (Remotely Configurable Optical Add/Drop Multiplexer), combining scalable multi-wavelength DWDM transport, fully reconfigurable sub-wavelength digital switching, and GMPLS-enabled end-end service intelligence and automation. Based on Infinera's large-scale photonic integrated circuits (PICs), the Infinera DTN enables a minimum of 100 Gigabits/second (Gb/s) of capacity on a fiber.

Beijing Office

In February 2008, Infinera opened a Beijing office to support customer deployments in China. With an experienced Chinese and international sales team, and a demonstration and training center for Infinera solutions planned to open soon, Infinera is well-equipped to support Chinese customers.

"MII certification is an important step forward for Infinera in the China market," said Scott Chandler, Vice President for Worldwide Sales, Infinera. "With its rapidly growing telecom, Internet, and wireless markets, China is an excellent market for Infinera's Digital Optical Networks solution. Infinera can deliver economic and technical benefits to incumbent and emerging operators in China, including greater capital efficiency, greater operating efficiency, and increased service velocity."

Mr. Chandler added that Infinera plans to continue to increase the resources Infinera dedicates to the Chinese market to ensure that customers in China can take advantage of its pioneering Digital Optical Networks architecture and photonic integration technology.

"We are 100 percent committed to the China market," said Mr. Chandler.

&

INFN: Short Interest DN 5.3% to 4.2M in Mid May 2008
Tuesday , May 27, 2008 16:18ET

According to new short interest data from NASDAQ, short interest for Infinera Corp (NasdaqNM: INFN) DECREASED 5.3% to 4,244,659 shares as reported in mid-May, 2008.

Based on INFN's 20-day average daily share volume of 509,785, it would require approximately 9 day(s) of buying to cover this short interest.

Rams, any update from your research tool?
cheers
Oliver

[la-onda]

any thoughts gang?[/b]


Infinera Reaffirms Q2 Guidance and Provides Initial Q3 and Updated FY08 Revenue Outlooks
Monday , June 16, 2008 16:05ET

SUNNYVALE, CA -- (MARKET WIRE) -- 06/16/08 -- Infinera Corporation (NASDAQ: INFN) today reaffirmed its guidance for the second fiscal quarter ending June 28, 2008; provided initial revenue guidance for its third quarter ending September 27, 2008; and provided an updated revenue outlook for fiscal year 2008 ending December 27, 2008 that is lower than its previous annual outlook.

The Company provided the financial update today in conjunction with its separate announcement that Deutsche Telekom (DT), one of the world's largest telecom carriers, has selected a new DWDM system from Infinera for its pan-European network. This represents a major win for Infinera at a Tier One carrier. As a result of the initial deployment of the Infinera DTN system with DT, Infinera expects to incur one-time charges totaling approximately $4 million during its second and third quarters.

For its second quarter, the Company reaffirmed its expectation to achieve results within its original guidance set on April 22 of adjusted GAAP revenues between $88 million and $90 million and EPS between $0.01 per share and $0.02 per share. The Company also indicated that it expects to have added at least two new customers in the June quarter, not including DT. The Company will announce its final results for the second quarter on Tuesday, July 22 after the market closes.

For its third quarter, the Company is providing initial preliminary guidance of adjusted GAAP revenue in the range of $75 million to $80 million. As a result, the Company now expects adjusted GAAP revenue for fiscal 2008 to grow approximately 10 percent from its fiscal 2007 invoiced shipments of $309.3 million. Previously, the Company had anticipated year over year adjusted GAAP revenue growth of approximately 25 percent.

The Company attributed the anticipated quarter over quarter revenue decline in the third quarter to current indications that the existing North American customer base will purchase less product in Q3 than previously anticipated. The Company believes this is related to the timing of new network builds at existing customers and the sales cycle with potential new customer wins, along with a product transition associated with its recently announced new system.

Jagdeep Singh, President and Chief Executive Officer of Infinera, said: "Our expected Q2 results and the recently announced DT win demonstrate that Infinera continues to win in the DWDM marketplace. We believe this is because we offer the world's best optical solutions and because we provide the only viable path with which customers can scale their networks to meet bandwidth growth needs into the next decade.

"While the preliminary outlook for our fiscal third quarter is lower than anticipated, we do not believe we have lost any existing customers, we do not believe that we have yielded any market share, and we are confident we will continue to add new customers during the rest of the year. Today's win with Deutsche Telekom and ongoing engagements with other leading carriers worldwide give us continued confidence in the strength of the long term strategy and growth outlook for Infinera."

Footnote: Adjusted GAAP results exclude the impact of the roll off of certain GAAP ratable revenues which were previously included as invoiced shipments and the exclusion of non-GAAP noncash stock-based compensation from our costs and expenses. Prior to the achievement of VSOE for our services, we presented our results on an invoiced shipment basis. Since we achieved VSOE, we now report our non-GAAP results on an Adjusted GAAP basis. There is no substantive difference between Adjusted GAAP and Invoiced Shipment results for the periods addressed in this release.

Seeking Alpha:

Infinera Plummets on Outlook; Has Right Business Model to Recover
The Photonic Integrated Circuit [PIC] pioneer Infinera Corp (INFN) cut its revenue growth forecast for 2008 after the close Monday, quoting a lower revenue forecast for Q3 2008, and sending its shares tumbling.

The company stood by its outlook of a profit of 1 cent to 2 cents a share on revenue of $88 million to $90 million for the second quarter.

Investors should look at the numbers in perspective and study Infinera's business model and its product price structure in order to understand its business strategy. The company's PICs are "essentially a WDM system-on-a-chip." All the lasers, modulators, amplifiers, multiplexers/demultiplexers, and other components typically found in WDM systems are integrated onto one single chip, enabling "radical footprint savings.

Based on the module's cost-effective optical-electrical-optical [OEO] conversion capabilities and the small size/weight, Infinera employs the well-known Razor-Blade business model and price structure by selling its basic system box with backplanes at deep discount or at cost, and later – only when its customers make a sale – overnight-delivering in a small box the modules with software license to be plugged in, at which point the revenue is actually made. This model is also similar to selling ink jet printers practically free, and ink sales bringing in the real money later on. This model makes sense to Infinera's customers since it requires very little initial capital and the ensuing investment becomes truly success-based.

This success-based business model has obviously gained Infinera market share even in the recent down quarters. Infinera has attracted more than twenty customers within its first three years, allowing some cash-tight carriers such as XO Communication (XOHO.OB) to offer the industry's famous "10 G in 10 Days" program.

Considering that:

    * Infinera's PIC technology may have a 4-5 year lead time over its competitors;
    * Infinera is introducing the new ILS2 next-generation optical line system that packs up to 160 DWDM wavelength with the advanced Raman amplification, reaching 2,500 kilometers in distance;
    * It bagged a contract with Tier-1 carrier Deutsche Telekom (DT) for its pan-European network;
    * China's government has issued a Network Access License to Infinera for the deployment of the Infinera DTN by China's telecommunications carriers;

No one should exclude the possibility of positive surprises by Infinera down the road.

Analyst update:
Infinera(INFN - Cramer's Take - Stockpickr) estimates lowered at Jefferies. 2008 EPS estimates lowered to 16 cents from 30 cents. Maintains buy rating and $16.50 price target.

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