SeekingAlpha  May 30  Comment 
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Find out which stock got hit by European concerns.
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Shares drop after an analyst turns negative on the company's prospects. Here's what investors need to know.
Motley Fool  Mar 13  Comment 
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MarketWatch  Mar 6  Comment 
Finisar Corp. and Infinera Corp. are among the optical companies whose shares are up Tuesday, after optical networking company Ciena Corp. reported better-than-expected earnings before the open. Finisar shares are up 3.6%, while Infinera shares...
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Can the beaten-down fiber optics solutions provider get its mojo back?
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The optical equipment maker ends 2017 on a high note and sets the stage for growth in 2018.


Company Overview

Infinera Corporation is an industry leader in wavelength-division multiplexing, a form of fiber optic communication. It provides digital operating networking systems to telecomunications providers worldwide. It is an innovater with its semiconductor technology with its photonic intergrated circuit(PIC). This technology is designed to provide customer with flexible engineering and faster time-to-service. It has the ability to deliver differentiated services without having to re engineer companys optical infrastructure. Although it is a fairly new company to the public, having gone public in 2007, it has been operating under the radar having been first launched as Zepton Networks. It first offered products in 2004.

Business and Financial Metrics



Infinera is a growth company with revenues increasing 47% from 2009 to 2010. This large increase in revenue growth did not however stop the company from recording a loss in 2010. It did however greatly reduce their loss by more than 60%. One of the companys main expense besides their costs of product is their research and development cost which accounts for 26%. They believe that innovation will make them a leader in the fiber optic transmission industry. Also the company is bringing their cost of revenues down as their gross margins increased from 33% in 2009 to 45% in fiscal 2010. Their business is becoming less expensive and therefore more profitable. Even though the company has been operating at a loss the last two years, this loss has been narrowed and it has a positive operating cash flow. This is a good sign that it can produce a profit from its core business. Their cash has increased on their balance sheet the past two years and should continue into the future.

Products Offered

The company’s PICs transmit and receive 100 Gigabits per second of optical capacity and incorporate the functionality of approximately 60 discrete optical components into a pair of indium phosphide chips. It also offers a range of support offerings, including 24/7/365 hardware and software technical support, installation and deployment services, spares management, first line maintenance services, on-site technical services, professional services, product technical training, and extended product warranties.

Infinera ATN

A new metro-optimized CWDM and DWDM platform. This product is cost effective for add or drop and multi-service aggregation in metro networks. With ATN, metro aggregation rings can be deployed in a standalone manner or as extensions off of DTN networks, providing more flexibility and additional CapEx savings over conventional metro CWDM/DWDM solutions. This service provides a centralized management of services across the network that is simple.

Infinera DTN

The DTN is the world's first digital Remotely Configurable Optical Add/Drop Mux (ROADM). This product is seen as the main building block for implementing the Infinera Digital Optical Network architecture. It will help drive down operating costs for its customers by Automatic inventory management, Automatic topology discovery, Point and click end-to-end service provisioning, more flexible service protection and restoration, and optical/IP integration via an Optical UN.

Infinera Line Systems

These systems are Infinera's next generation optical line systems that use photonic integrated circuits to deliver 2 times wavelength density of the next competitor. This system will help companys transition from 10G to 40G quickly and from 40G to 100G in a shorter time frame.

Infinera IQ

IQ is based on a real-time operating system core and consists of intelligent transport networking capabilities. These capabilities include IQ Bandwidth Management, IQ Network Automation, IQ Digital Wrapper, and IQ Flexible Protection. This will help the system simplify tune-ups, better digital management, and greater protection on both digital and optical metrics.

Infinera Management Suite

Infinera Management Suite is an integrated set of product applications that address network management challenges. They do this by using a simplified GUI based provisioning leveraging network routing and signaling intelligence that will speed up service deployment. Also it uses tools to monitor, troubleshoot and isolate network wide and equipment level problems. It is a total network life cycle with optical planning, optimal routing, what-if analysis, and comprehensive output reports for new and incremental network design and engineering.

Infinera Submarine Solution

This product enables service providers to deploy a common optical transport solution across metro, regional and long-haul terrestrial back haul networks. This is good for use with trans-oceanic optical transmission. It will help upgrade existing submarine cables to 25GHz channel spacing. In addition, deployment of the Infinera submarine solution can add years of life to an operator's existing sub sea infrastructure by providing up to twice the number of wavelengths.

Corporate Governance

Tom Fallon President and Chief Executive Officer Drew Perkins Co-Founder and Chief Technology Officer

David F. Welch, Ph.D. Co-Founder, Executive Vice President, Chief Strategy Officer, and member of the Infinera Board

Ita Brennan Chief Financial Officer

Minoo Mortazavi Member of the Office of the COO and VP of Systems Manufacturing and Strategic Materials

Fred Kish, Ph.D. Vice President, PIC Development and Manufacturing

Ron Martin Vice President, Worldwide Sales

Howard Lukens Vice President, Strategic Sales

Scott Chandler Vice President, Strategic Sales Lonny Orona Vice President, Worldwide Customer Service and Technical Support

Michael O. McCarthy III Chief Legal and Administrative Officer

Paul Whitney Vice President of Human Resources

Financial Analysis

Porters 5 Forces

Threat of New Entrants

LOW The threat of new entrants is low in this industry because of the high start up costs and the amount of money that must be invested in research and development. Also, to compete in this market, companys must have a highly skilled staff in order to quickly fix any problems that might arise from the network. Since most services are provided to businesses and not individual customers, a disruption in the system is highly costly to consumers. Without a highly skilled staff to handle technical problems, consumers will be more inclined to switch.

Rivalry Among Competitors


Alcatel-Lucent(ALU)Provide transformation services to service providers, enterprises, governments, and strategic industries to deliver voice, data, and video communication services to end-users worldwide. They offer a software suite that connect the customer with resources to compete their goals. Also they provide end-to-end communications networks and individual network elements, as well as designs and a suite of radio frequency products, such as cable, antenna, tower systems, and their related electronic component.

Cisco Systems, Inc. (CSCO)Design and manufacture internet protocol based networking and products related to telecommunication and information technology worldwide. Cisco Systems is by far the largest of Inferians competitors with over $40 billion dollars in revenue per year. They offer routers that connect mobile, data and voice networks.

LM Ericsson Telephone Company(ERIC) Provide communications equipment and related professional services, and multimedia solutions to mobile and fixed network operators worldwide. Their networks segment provides core network solutions which include IP infrastructure and network management tools. The segment also includes micro-wave and optical transmission solutions for mobile and fixed networks, as well as offers related network rollout services.

Threat of Substitutes

Very Low to LowThe substitute for fiber optical transmission is electrical transmission which uses coppers wire instead of fiber optics. Electrical transmission is often preferred for short distances because it has a lower material cost a lower cost of transmitters and receivers, the capability to carry electrical power as well as signals the ease of operating transducers in linear mode. Electrical is only preferred in short distances and fiber optics are preferred in all others. This is because with fiber optics, because of its high data carrying capacity and its ability to travel long distances without disruption and it avoids having a ground current.

Buyer Power

Medium to High In the ever changing world in the Information Age, companies in the technology sector must be constantly updating their products through research and development. Buyers have many different tech options when a new product is being offered on a almost yearly basis. This for Infinera means that they must develop their 100G network at a fast past, or they may not have the first mover advantage that they have depended on for their business. Infinera is not as large as some of their competitors like Cisco, and therefore cannot necessarily provide a cost advantage to their customers. Their advantage come from their superior product that is faster than competitors.


SWOT Analyis


A strength of Infinera is that it has a first mover advantage in fiber optic transmission. They are constantly improving their network operating capability by allowing for 40G and on the edge of being able to go 100G. 40G is now cheaper then installing 4 separate 10G lines. Fiber optic transmission is clearly better and faster than conventional copper wire.


The weakness comes from setting up the network for the customers. Setting up a network requires a great influx of cash because of research and development. Problems will always rise from the network but having a great technical staff can solve the quick problems that arrive with a new system.


The opportunity for Infinera Corp. lies in developing nations like China and India. These are untapped markets that still need infrastructure in their networks. These countries also have a quarter of the worlds population and have many growing global companies. These emerging companies can be a major revenue source. The lack of infrastructure is also a main reason for Infinera to move into the market and become a major supplier.


Fiber optic technology is the technology that the future holds and is needed in order to keep operating costs down. The company has no threats from replacements as there is no substitute for fiber optics at this point in time. Threats to the company come from currency risk, as 25% of their business come from international sales.

Marketing Strategies


Ininera's products can be used in a variety of ways since it can be used in transmitting with telephone services, computers, and cable television. This allows for them to market their product to a variety of different industry. These industry's range from financial services companies to cable operators. Government networks, research & development centers, and phone carriers also are marketed for their products.


alt text

Infinera is a global innovatar with offices in Canada, United Kingdom, Singapore, China, India, Japan, and the United States. The company is headquartered in Sunnyville, California, which is their main sales office. The majority of Infineras sales come from the domestic market with approximately 75% coming from these markets annually. The remaining 25% comes from Europe and Asia.


The price of Infinera's systems are highly competitive with the industry. The cost is high to set up but companies can improve operational performance and reduce maintenance costs by switching to their systems. Electrical transmission is cheaper but is not as efficient as fiber optic. Fiber optics greatly reduce companys operating expenses and is therefore preferred in the market.


The Infinera Express- a mobile demonstration truck and trailer equipped with the most innovative optical transmission systems. They are staffed with technical experts who show demonstrations that showcase the Infinera IQ systems. This allows customers with first hand experience with the worlds first optical networking system powered by PIC's. Customers can create circuits in seconds using the IQ networking system. Also customers can be a click away from seeing how Infinera's Network Planning System integrates with our DNA EMS. This express allows for the promotion of Infineras products to customers who may have not heard of their products.The corporation operates two express trucks, one in North America and the other in Europe. Companys can request of visit from the unit on the companys website.

Recent News

Infinera is to showcase their market-leading long haul and DWDM platform, the Infinera DTN, and Infinera's ATN metro WDM edge solution at ANGA Cable show. ANGA Cable takes place May 3-5 at Cologne Fairgrounds in Cologne, Germany.


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