News Article

Bumper Quarter As Infinera Spreads Its Wings

Now with a much more diverse set of customers, photonic integrated circuit maker Infinera records its best financial quarter yet, and targets Europe and Asia for further growth.

An increasingly diverse set of customers has enabled the US photonics company Infinera to post its best-ever financial quarter.

The Californian outfit, whose digital optical network systems rely on complex InP photonic integrated circuits (PICs) manufactured at its in-house wafer facility, posted record invoiced shipments of $93.4 million in the final quarter of 2007, and an unofficial profit of $15.9 million.

When full expenses, including stock-based compensation and a revaluation of warrants, were taken into account, that profit switched to a net loss of $3.9 million.

Despite that, it is clear that Infinera is heading in the right direction. Invoiced shipments for 2007 as a whole were $309.3 million, more than double the 2006 figure of $146 million.

Key to that improvement has been Infinera s diversifying customer base. The company now boasts 41 network operators and internet content providers as clients, compared with 23 one year ago.

That has also helped to reduce Infinera s reliance on key accounts, such as Level 3 Communications. One year ago, sales to its top customer represented almost half of Infinera s total income, but that proportion has now shrunk to just 18 per cent.

CEO Jagdeep Singh hailed this transformation as a "remarkable achievement", and explained that the growing customer base resulted from the flexibility offered by Infinera's technology platform, which allows customers to respond quickly to today's unpredictable and often sudden changes in bandwidth demand.

"Customers are choosing flexibility, without the requirement for re-engineering their optical plants," said Singh.

He cited Infinera s recent deal with a new UK operator as one example of that flexibility. According to the CEO, Carphone Warehouse was able to deploy a national network in only eight weeks using systems based on Infinera s PICs, adding: "They can increase capacity at the touch of a button."

The next challenge for Infinera is to further spread its wings beyond the domestic US market, which currently accounts for more than 81 per cent of its total business.

With spending on research and development now set to increase significantly, Infinera said that it expects to post a much smaller non-GAAP profit on invoiced shipments of between $90 million and $92 million in the current quarter.

Ignoring the charges relating to warrant revaluations and stock-based compensation, it should record a net income of between $2.5 million and $4 million.

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