Telecom equipment provider Infinera (INFN) reported earnings this afternoon, beating estimates. Adjusted GAAP revenue of $80.9M was above the range of $75-80M given in Q3 guidance. Gross margins of 42% were on the low end due to one time effects from their rollout at Deutsche Telecom, where a migration from legacy DWDM to PICs is now complete. Infinera added 5 new customers in addition to DT and began shipping their ILS2 systems in August. And what about the effects of the economy?
In their conference call, Infinera gave cautious guidance for the fourth quarter and declined to comment on 2009 – very prudent considering the current environment. But they did not reduce guidance, keeping their 10% projected growth in 2008 revenues over 2007, which corresponds to a $75M revenue expectation. They said that they still see no significant change in spending plans from customers from the economic environment, with the obligatory ‘that could change’ comment. I’m sure we will hear that alot.
Level 3 remains their largest customer at 27% of revenues, or some $21.8M, but only one other customer was above 10%. That customer, SDN Communications, showed up just the other day in my regional fiber post. Given that SDN’s footprint is limited to South Dakota, to be a 10% customer they must be rolling out new gear very quickly! Missing from their 10% customers from Q2 are Global Crossing and Cox. Are these the two North American carriers that slowed their plans enough for Infinera to cut projections back in June? Hmmm, hard to tell, equipment purchases are chunky.
There has been speculation that Infinera may move into the metro market, as opposed to merely the metro core with their existing gear. If so, it didn’t happen today – the company declined to say much of anything on that subject.
If you haven't already, please take our Reader Survey! Just 3 questions to help us better understand who is reading Telecom Ramblings so we can serve you better!
Categories: Financials · Telecom Equipment
Join Our LinkedIn Group
so i wonder who they are talking about here. any thoughts? i wonder if lvlt has been selling some fiber?
Q: Okay. And you made a comment, I think it was Jagdeep, you said you saw significant activity
in the pipeline of North American longhaul build-outs, and it was sort of vague. Could you maybe
comment on that or give us a little more granularity on that Jagdeep?
A: Yeah, happy to do that. So I think the comment specifically was that we
see activity in the North American long-haul market, and there is I guess if you look at the pipeline
overall there’s definitely carriers that are looking at building out nationwide networks, and for that
matter Pan-European networks. And so the key task for us is to see if we can win that business.
But the point – the main point I was making was that there’s activity out there and that’s relevant,
because we get a lot of questions about the macroeconomy and the effect on bandwidth and buildouts
and so on. And I think based on what we’re seeing, there’s no – we’re not aware of carriers
stopping their build-outs based on and macroeconomic concerns at this point, which is one part of
the solution. The other part is we’ve got to go out and win that business. But yeah, we definitely
see carriers and service providers of all types looking at building out networks and in response to
bandwidth growth
todd,
I suspect that rather than new fiber hitting the market that this refers to the general balance in demand. There is no glut and traffic is growing, hence carriers must bring new capacity online or else stop selling it.