News Article

$26m Loss Fails To Daunt Infinera

Despite a widening loss, the photonic integrated chip company is undiscouraged from touting its technology as a unique way to support the exponential growth of internet traffic.

In its first quarter as a publicly listed company, Infinera recorded revenues of $58.4 million for what CEO Jagdeep Singh calls its “contrarian approach" to optical communications.

According to formal accounting rules this delivered the Sunnyvale, California system maker a net loss of $26.1 million for the quarter ended June 30, compared with revenues and loss of $49.2 million and $19.8 million in the previous quarter.

However, by applying a different accounting method that Singh feels is more appropriate, and by excluding stock compensation expense presumably resulting from June's IPO, Infinera showed a profit of $2.7 million.

Now that it is obliged to talk publicly about its finances, Infinera is happy to reveal historic results for the sake of comparison, and use them to back up its positive outlook.

In particular, gross margins have improved dramatically over the past 18 months, as the company has ramped up production of systems relying on its InP-based photonic integrated circuits.

From its current position, providing one third of the world s 10 Gb/s ports (according to Infinera s own figures), Singh sketched out a future where Infinera s telecoms customers will be doubling their network capacity each year, allowing the company to grow 25 percent annually.

Whether or not this vision "“ which sounds like a throwback to the dotcom heyday of 1999 "“ is realized, Infinera continues to win new business, displacing incumbents in every case, according to Singh.

One deal, announced on the same day as its financial results, will provide a new 12,000 mile network for Cox Communications, the third largest cable provider in the US, and means Infinera has business with three of the top five US cable companies.

Another newly-signed deal effectively trebles the capacity of XO Communications, a US-based business carrier with whom Infinera is already working on an 18,000 mile network "“ more evidence, if it were needed, that the unconventional approach of Singh et al is winning customers round to their way of thinking.

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