Infinera's Looking at a Tough 2011
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JANUARY 28, 2011 | Craig Matsumoto | Comment (1) |
Analysts are slamming Infinera Corp. (Nasdaq: INFN) today, now that it's apparent the company's troubles could stretch beyond one quarter and all the way into 2012.
After reporting fourth-quarter revenues of $117.1 million on Thursday, Infinera predicted revenues of just $90 million to $97 million for its first quarter, which ends in March.
That's partly because Infinera sold so much gear in mid-2010; customers still haven't filled up those boxes. But another factor is the lack of a 40Gbit/s option for the DTN system. "There are some opportunities in the short term that we are missing out on with customers who would require higher fiber capacity today," CFO Ita Brennan said on Thursday's earnings call.
Why this matters
At worst, this could mean Infinera struggles throughout 2011, especially if 40Gbit/s demand increases. Infinera won't release a 40Gbit/s product until midyear, and its R&D is focused on delivering a 100Gbit/s product in 2012.
Analysts think the 100Gbit/s cards could be a huge product for Infinera. But their reports this morning say the company will be treading water in the meantime:
Mike Genovese of MKM Partners writes: "We expect 2011 to be tough for Infinera as the market for new optical capacity continues to shift to 40G, and Infinera does not have a solution."
George Notter of Jefferies & Company Inc. writes: "This is now a 'show me' stock. ... It's now clear Infinera will be working through that hangover for the remainder of Q1 at least."
For more
Here's how Infinera's 2010 went, including its 100Gbit/s decision and the prediction of a tepid fourth quarter.
40G pricing
Craig Matsumoto
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FRIDAY JANUARY 28, 2011 2:18:19 PM
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The heart of all this seems to be 40G pricing. Infinera is saying that, measured by $ per gigabit transported, 40G has reached parity with 10G, and that's leading the fiber-hungery operators to grab for 40G. Interesting.
I think you can still argue that the 40G life cycle will get cut short once 100G is available. In the meantime, though, there's some good news for the vendors that have 40G out there. |
