Infinera tumbles; $100M deal reportedly lost to Alcatel-Lucent

Jefferies' Geroge Notter reports Infinera (INFN -11.5%) has lost a $100M Verizon contract for long-haul optical transmission hardware to Alcatel-Lucent (ALU +0.5%). Infinera was considered the favorite to win the deal, which will make Alcatel Verizon's second long-haul supplier. Ciena (CIEN +3.9%) is the other.

Notter reports hearing "pricing was exceedingly low" for the deal, and that this, along with an intervention by Alcatel CEO Michel Combes, helped Alcatel win out even though Verizon's tech people are partial to Infinera's innovative DTN-X transmission platform (previous).

Notter: "The anecdote serves as another reminder that the best technology doesn't always win in the Communications Infrastructure space ... Relationships and pricing can go a long way." Infinera is said to have invested heavily in trying to win over Verizon, which would have acted as a major reference account.

Possibly motivating Alcatel to price aggressively: The company's optical transport sales fell 1.8% YY in Q3, and have been under pressure for a while. Alcatel reports on Feb. 6, and Infinera on Jan. 29.

Comments (6)
  • MEKhoury
    , contributor
    Comments (408) | Send Message
    21 Jan 2014, 01:44 PM Reply Like
  • AlphaRat
    , contributor
    Comments (35) | Send Message
    Yep keep it up ALU. Good quality company with a nice growth strategy, this will propel it as a distinct competitor in the telecom space. Keep an eye on this one !
    21 Jan 2014, 02:33 PM Reply Like
  • tsb10530
    , contributor
    Comments (222) | Send Message
    Glad to see that ALU is doing better! However, trying to manage their ongoing debt levels still presents serious constraints for ALU. With the downturn in the French economy, the government is bound to have it's hand out for concessions that impact growth in the private sector.
    21 Jan 2014, 05:01 PM Reply Like
  • JoseV
    , contributor
    Comments (401) | Send Message
    M. Combes is doing all the right things including social responsibility something most CEOs don't do, to their detriment, employee motivation contributes directly to the bottom line. Vive Ma Bell(e)!
    21 Jan 2014, 07:39 PM Reply Like
  • Sam Johnston1
    , contributor
    Comments (514) | Send Message
    Combes is a heck of a salesperson and he's well respected and connected in the business. Alcatel picked up the "perfect" candidate to right the ship. He's executing with determination and a "no fail" attitude.


    He's knows Alcatel was at its tipping point for going extinct and had to make decisions that were unpopular but needed to potentially get Alcatel back in the black. I wouldn't be surprised if they eek out a net profit for the 4th Q.


    The PPS stabilized last Friday and is now starting back in an uptrend into earnings. The pps is now cheap enough for ETFs to defend buying thanks for Douche Bank and Bernstein.


    I suspect there were many "fear" sellers last week due to the manipulation but that provided a nice opportunity to buy in cheaper.
    21 Jan 2014, 11:42 PM Reply Like
  • in-it
    , contributor
    Comment (1) | Send Message
    a part of a company that uses both Inf and ALU, the Inf DTNX is a better product
    27 Jan 2014, 08:02 AM Reply Like
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