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.
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