Infinera rallies on Q1 beat, Q2 revenue guidance; Ciena also up

In addition to beating Q1 estimates, Infinera (INFN +5.9%) guided on its CC (transcript) for Q2 revenue of $160M-$170M and EPS of $0.02-$0.06 vs. a consensus of $156.3M and $0.05. As is its custom, rival Ciena (CIEN +5.8%) is following Infinera higher.

Thanks to a favorable mix, Q1 gross margin was 41.8%, +40 bps Q/Q and +590 bps Y/Y, and above guidance of 40%. Infinera only forecasts a GM of 39%-41% for Q2 due to the margin pressure caused by new large-footprint deployments, but still expects a low-40s GM for the full year and future margin gains as it fulfills capacity expansion orders for major deployments.

Strong North American demand allowed revenue to grow 3% Q/Q in seasonally weak Q1. Infinera had two 10%+ customers - a cable MSO and a tier-1 North American carrier, and added one more client for its dense/high-capacity DTN-X optical transmission platform, raising the total to 42.

Not surprisingly, a positive outlook was provided for the 100G optical market, where the company and Ciena have leading positions. Infinera says it's confident it can outgrow the broader 100G market in 2014.

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