Jeffrey Thomas Kvaal, Nomura Securities Co. Ltd., Research Division - MD [25]
--------------------------------------------------------------------------------
Let me start actually with a follow-up, which is following up from last quarter, you talked about some intensifying pricing pressure, doesn't seem like things are as intense this quarter. Does that mean things have reverted to where they were a quarter ago or just haven't gotten any worse?
--------------------------------------------------------------------------------
Thomas J. Fallon, Infinera Corporation - CEO & Director [26]
--------------------------------------------------------------------------------
You should assume that I communicated very poorly last quarter. (YES, WE STILL HAVEN'T RECOVERED FROM YOUR 'POOR' COMMUNICATION) This industry always has price competition. We -- I wasn't implying that it's getting worse than that. My indication was that on new footprint, that it's becoming even more intense on new footprint. And I -- that's no change on that. To me, it was trying to be fully disclosing on what we see. My take is on new footprint. We come armed with an arsenal of tools that actually allow us to price aggressively with things like Instant Bandwidth and make a fair return over time, but the aggressiveness upfront is -- it's significant. That's one of the reasons you're seeing, as we talk about, some of the compression in Q3, because a lot of that is new footprint. The best indicator in my mind of our future opportunity is how much footprint we're deploying both with current and new customers. So it's not something that we lose a lot of sleep about. We're not walking away from deals. We're going to go aggressively pursue deals where we can make a fair return over time. And we have a toolbox that will allow us to do that.
--------------------------------------------------------------------------------
Brad D. Feller, Infinera Corporation - CFO [27]
--------------------------------------------------------------------------------
And Jeff, just to clarify, I think the, and Thomas clarified this before is, if you had any one of those deals, it's very normal. The fact that you have multiple of them that we're winning at the same time, that's what puts the extra pressure on the margin side. |
