Fri, Jan. 23, 10:32 AM
- Infinera (INFN +17.7%) knocked the cover off the ball yesterday afternoon, soundly beating Q4 estimates and issuing strong Q1 guidance on the back of growing demand for its DTN-X optical transmission/switching platform for 100G deployments.
- Rival Ciena (CIEN +3.7%) and optical component vendors JDS Uniphase (JDSU +2.7%) and Finisar (FNSR +2.3%) are rallying in response. The companies followed equity markets higher yesterday after Verizon guided for its 2015 capex to be slightly above 2014 levels (contrasts with AT&T's planed capex cut).
- On its CC (transcript), Infinera said it added 10 new invoiced DTN-X customers in Q4 (3 new to Infinera altogether), raising its total to 59, and that nearly half of all DTN-X clients are now opting for the company's Instant Bandwidth rapid provisioning tech. Initial revenue for the Cloud Xpress point-to-point interconnect platform was received in December, and 8 customer commitments have been received to date.
Dec. 24, 2014, 2:40 PM
Dec. 23, 2014, 1:13 PM
- Cowen's Paul Silverstein believes Verizon will likely select Ciena (CIEN +1.9%) to be a supplier for its upcoming 100G metro optical buildout.
- Though 100G is increasingly a part of long-haul network upgrades, metro investments are still in their early stages. Verizon stated earlier this year Fujitsu and Tellabs would be among its 100G metro suppliers.
- Soft demand from North American carriers has been taking a toll on Ciena and many others. Verizon announced last week it has used Ciena's WaveLogic photonic systems to provision its first 200G ultra-long-haul link.
- Update: Silverstein thinks Ciena will be "one of the two key suppliers" for Verizon's buildout, and that a deal could be worth $200M-$300M over two years. "To be clear, our checks indicate that Verizon has not selected vendors for this 100Gbps metro optical build-out. That said, our checks also indicate that Ciena currently is well in front of the pack..."
Dec. 11, 2014, 9:25 AM
- Though Ciena (NYSE:CIEN) missed FQ4 EPS estimates (while slightly beating on revenue) and offered FQ1 EPS guidance ($540M-$570M) that was below a $566.6M consensus at the midpoint, it guided on its CC for 7%-9% FY15 (ends Oct. '15) revenue growth; consensus is at 7.1%.
- Also: Gross margin is expected to rebound to the low-40s range in FQ1 after falling 640 bps Q/Q and 290 bps Y/Y in FQ4 to 37.9%. Longer-term, Ciena expects GM to return to the low-to-mid 40s range.
- Helping Ciena's cause today: Shares were down 29% YTD going into earnings, thanks to worries about weak telecom capex and the margin pressure caused by "up-front incentives" provided to AT&T for its huge Domain 2.0 initiative.
- Ciena has been trying to lower its dependence on AT&T and other major telcos: "Non-carrier infrastructure" firms (including Internet companies) now make up more than 30% of revenue, and are expected to continue growing their revenue share.
- FQ4 results, details
Dec. 11, 2014, 7:50 AM
- FQ4 adjusted net loss of $8.2M or $0.08 per share vs. profit of $18.3M or $0.16 one year earlier.
- Adjusted gross margin of 37.9% vs. 40.8% a year ago.
- Converged Packet Optical revenue of $383.3M vs. $350.9M a year ago.
- Packet Networking revenue of $56.4M vs. $61.2M.
- Optical Transport revenue of $26.5M vs. $52.6M.
- Software and Services revenue of $124.8M vs. $118.7M.
- FQ1 revenue expected at $540M-$570M, with adjusted gross margin in the low 40s range, and adjusted operating expense of about $210M.
- Conference call at 8:30 ET
- Previously: Ciena misses by $0.21, beats on revenue
- CIEN -2.7% premarket
Dec. 11, 2014, 7:03 AM
Dec. 10, 2014, 5:30 PM
Dec. 9, 2014, 1:52 PM
- Verizon CFO Fran Shammo has promised his company will continue growing wireless capex (albeit while cutting wireline capex) to keep up with data traffic growth. Small cells and smart antennas were mentioned as areas of interest.
- The remarks have been well-received by investors in telecom equipment and component/chip vendors, many of whom have been hit hard by soft North American and (to an extent) European spending. The Nasdaq is up 0.3%.
- Gainers: JDSU +3.6%. FNSR +3.1%. CYNI +10.1%. INFN +2.8%. CIEN +1.9%. AMCC +3.7%. PMCS +3.7%. ZHNE +3%. OCLR +5.4%. AFOP +2.8%. ADTN +2.5%. UBNT +2.2%. XXIA +1.7%. CALX +3.5%. EZCH +2.9%. SONS +2.4%. Sonus is also benefiting from a bullish Wedbush coverage launch.
- The group was pummeled in November after AT&T set a 2015 capex budget of $18B, down from 2014's $21B.
Nov. 20, 2014, 1:38 PM
- Optical networking hardware vendors and their component suppliers are turning in a good day. The gains come a day after component vendor Oplink announced it's being acquired by Koch Industries for $445M, and will be managed by connector maker Molex (a Koch subsidiary).
- RBC thinks Koch's entrance into the slumping component industry could trigger further consolidation. "Current fab utilization rates remain low ... with optical component vendors unable to charge a premium for their innovation. Gross margins are currently weighed by competitive pressures with optical component makers willing to cut pricing to account for high fixed costs."
- The firm believes Finisar (FNSR +1%) could be a buyer, and JDS Uniphase (JDSU +1.5%) and Oclaro (OCLR +7.1%) sellers. JDS, set to spin off its component unit, is facing activist pressure to put the business on sale.
- Meanwhile, Ciena (CIEN +2.8%) announced this morning it's partnering with Avaya to offer an enterprise solution that pairs its optical networking and integrated optical/Ethernet gear with Avaya's Ethernet switches. Like peers, Ciena is trying to lower its dependence on pressured carrier capex budgets.
- Other gainers: AFOP +3.7%. NPTN +3.3%. ADTN +2.7%. INFN +1.9%.
Nov. 13, 2014, 3:28 PM
- Though Cisco is higher after beating FQ1 estimates and issuing soft FQ2 guidance, many telecom equipment and component/chip names are going in the opposite direction.
- At issue: Cisco reported a 10% Y/Y drop in service provider orders (-18% in the U.S.), while stating on its CC (transcript) it "saw dramatically reduced spend at several large U.S. service providers." The networking giant also suggested demand will remain weak during the next couple of quarters.
- The remarks came just a few days after AT&T set a 2015 capex budget of $18B (down from 2014's $21B), prompting a Monday selloff in equipment vendors and their suppliers.
- Today's decliners: ALU -3.8%. CIEN -2.8%. JDSU -3.1%. FNSR -3.7%. JNPR -1.7%. INFN -3.8%. RKUS -3.4%. ZHNE -3.2%. AMCC -4.1%. CALX -2.7%. CYNI -1.8%. ADTN -3.5%. ALLT -2.4%. FN -1.9%.
Nov. 10, 2014, 9:51 AM
- Declaring its Project VIP network expansion effort ahead of schedule, AT&T has set a 2015 capex budget of $18B, down from 2014's $21B and below a prior forecast of $20B. The figure is equal to only 13% of AT&T's 2015 revenue consensus.
- Telecom equipment and optical component makers, many of whom have already felt the effects of AT&T's subdued 2014 wireline capex, are off in early trading. CSCO -1.4%. ALU -4.8%. CIEN -6.6%. ADTN -7.8%. JNPR -2.5%. RKUS -2.1%. SONS -2.9%. FNSR -2.9%. JDSU -1.1%. RKUS -2.1%. XXIA -2%. FFIV -1.6%. ERIC -1.7%.
- Cisco delivers its FQ1 report on Wednesday. The networking giant reported an 11% Y/Y FQ4 drop in service provider orders, thanks to both weak demand and share loss.
Oct. 24, 2014, 12:32 PM
- Though Ericsson (ERIC -3%) beat Q3 estimates, the mobile infrastructure giant stated North American business activity "slowed down during the quarter as operators currently focus on cash flow optimization." It added North American spending patterns make it tough to judge near-term demand.
- Ericsson's North American sales fell 3% Y/Y to $1.93B, partly offsetting strong growth in China, India (+56%), the Middle East (+38%), and other emerging markets. Top-line figures were boosted some by M&A.
- AT&T and Verizon have been taking cautious approaches to capex, and Sprint (though investing heavily in 4G following the SoftBank deal) has been looking to cut costs under new CEO Marcelo Claure. The U.S. and Japan have been ahead of many other developed markets in ramping 4G coverage.
- Juniper (JNPR -6.3%) offered light Q4 guidance two weeks after delivering a Q3 warning, and reported its service provider sales were down 6% Y/Y due to soft demand from Asia-Pac, EMEA, and (especially) U.S. carriers.
- When the world's #2 carrier router vendor was asked on the CC (transcript) about 2015 sales, CEO Shaygan Keradpir admitted Juniper has poor near-term visibility, and that a rebound could take time. "Because we think these cycles typically take 2 to 4 quarters ... our planning assumption is that growth will return in the second half of 2015."
- Nokia and Infinera recently offered more positive numbers/commentary. Bulls have argued strong data/video traffic growth will lift capex. Bears have argued soft (if not negative) carrier revenue growth will continue pressuring spending.
- Decliners: ALU -1.6%. JDSU -2%. INFN -3.1%. CIEN -2.5%. CALX -2.5%. FNSR -1.8%. ADTN -1.5%. The Nasdaq is up 0.4%.
Oct. 22, 2014, 5:38 PM
- Infinera (NASDAQ:INFN) guided on its Q3 CC for Q4 revenue of $175M-$185M, above a $160.4M consensus.
- The outlook serves as a breath of fresh for the telecom equipment industry, given its recent issues. Infinera bulls have argued for some time the company's strong 100G optical exposure would allow it to outperform.
- Rival Ciena (NYSE:CIEN) is ticking higher in response.
- Infinera's Q3 results, PR
Oct. 15, 2014, 4:07 PM
- In an encouraging sign for beaten-down telecom equipment and chip/component stocks, Adtran (ADTN +5.7%) managed to rally even though it guided on its Q3 CC (transcript) for a low-to-mid teens Q/Q revenue drop. Consensus (doesn't appear to have fully accounted for Adtran's Q3 warning) was for revenue to drop 2% to $154.9M in Q4.
- Adtran attributed much of its Q3 weakness to "a decline in Europe as a large project there had a seasonal slowdown." Enterprise softness also took a toll.
- The company "[expects] to see an upturn in this business" in 2015, but European sales are expected to remain soft in Q4. Other equipment vendors, such as Juniper (JNPR +2%) and Ciena (CIEN +2.7%), have provided weak guidance blamed on U.S. wireline capex; AT&T is generally seen as a big culprit.
- In addition to Juniper and Ciena, many other industry names have closed with healthy gains. PKT +6.3%. INFN +3.4%. ZHNE +6.7%. ALLT +5.2%. AFOP +4.5%. AMCC +12.5%. CYNI +4%. CALX +3.3%. FNSR +3.1%. UBNT +4.2%. OPLK +3.4%. RKUS +3.3%.
Oct. 10, 2014, 10:58 AM
- Telecom equipment makers and their chip/component suppliers are seeing more pain after Juniper (JNPR -7.5%) and Procera (PKT -32%) issued Q3 warnings (I, II), the latest bad earnings news for an industry that has seen plenty due to soft wireline capex. A few enterprise-focused networking vendors are also having a rough day.
- Cisco (CSCO -3.1%) has fallen below $23.50, and Alcatel-Lucent (ALU -4.3%) below $2.50. Other decliners: CIEN -4.7%. JDSU -4.6%. FFIV -5.3%. ANET -7%. RKUS -5.7%. SONS -4.4%. INFN -2.4%. CYNI -3.5%. AMCC -10%. PMCS -3.4%. NPTN -7.7%.
- Analysts are defending Juniper, arguing (in remarks that also have implications for peers) bad news has been priced in and that telecom capex is likely to improve in 2015. Bulls have argued Web/mobile traffic growth and SDN/NFV investments will ultimately boost capex, in spite of industry service revenue pressures.
- The Nasdaq as a whole is down 1.2%. Chip stocks are off sharply following Microchip's warning and prediction of an industry correction.
- Yesterday: Telecom equipment stocks slump as capex worries persist
Oct. 9, 2014, 11:34 AM
- Alcatel-Lucent (ALU -9%) is headlining a group of telecom equipment vendors selling off this morning, as worries about weak telecom capex remain following plenty of bad earnings news. Alcatel's declines come in spite of an upgrade to Buy from Craig-Hallum.
- Morgan Stanley has cut its Q3 and Q4 Juniper (JNPR -1%) estimates due to expectations of weak AT&T capex. Jefferies reported in June AT&T had slashed its wireline capex, and Ciena (CIEN -3.7%) stated in September AT&T was responsible for its soft Oct. quarter guidance.
- Ma Bell has slashed wireline capex ahead of the full launch of its huge Domain 2.0 SDN/NFV initiative. However, like Ciena, Morgan Stanley asserts Domain 2.0 remains a long-term positive for spending. MKM has argued it's a positive for Ciena and several other firms, but a negative for Cisco given a loss of vendor lock-in.
- Yesterday, BofA/Merrill launched coverage on Alcatel with a Neutral rating, and expressed concerns about the company's ability to hit 2015 revenue estimates amid a weak demand environment. Two weeks ago, Dell'Oro forecast global telecom capex will fall 2% in 2015 due to slowing mobile revenue growth.
- Bulls argue a lot of bad news is priced in, and the strong Web/mobile traffic growth will provide a lift to capex.
- Other decliners: ERIC -2.6%. ZHNE -3.2%. PKT -3%.
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