Mar. 12, 2014, 6:38 PM
- Goldman's upgrades of Infinera (INFN +14.9%) and Calix (CALX +2.8%) wound up sparking a broader rally telecom equipment and optical component makers. Notable gainers: FNSR +6.2%. UBNT +6.7%. CYNI +5.1%. CIEN +3.8%. JDSU +5.4%. AFOP +3.4%. NPTN +3.4%. ADTN +2.8%. FN +2.2%.
- Goldman's Simona Jankowski believes Infinera, which recently lost a major Verizon deal to Alcatel-Lucent, has regained Level 3 as a client. She also estimates 100G optical system shipments "have approximately a 15% point gross margin advantage" relative to 10G counterparts, and sees this delta boosting Infinera's margins as 100G "increases from mid-50% of total product revenue in 2013 to mid-70% in 2014."
- Regarding Calix, Jankowski reports seeing better spending trends among the tier 2/3 carriers the company leans heavily on, and thinks 2014/2015 estimates now "more accurately reflect" Calix's growth trajectory.
- Today's gains come as the optical networking industry's OFC 2014 conference continues. As usual, the conference has seen a slew of product launches. Ciena has followed Infinera (previous) in launching software tools for intelligently controlling a network's optical layers, and JDS Uniphase is showing off several new components and modules.
Mar. 6, 2014, 10:49 AM
- Though Ciena's (CIEN +2.1%) FQ1 revenue was only in-line, its gross margin (43.4%, +260 bps Q/Q and -120 bps Y/Y) and opex ($199.8M, -5% Q/Q and +13% Y/Y) were favorable to guidance for a low-40s GM and $205M in opex. That, in turn, helped EPS beat by $0.07.
- Ciena expects FQ2 revenue of $540M-$570M, in-line with a $561.1M consensus. GM is again expected to be in the low-40s range, and opex is expected to rise to $210M.
- Sales of integrated Ethernet switching/optical networking gear rose 39% Y/Y in FQ1 to $333.4M (62.5% of revenue). Software/services sales -1% to $108.5M; Ethernet switching +13% to $51.7M; optical transport -30% to $40.1M.
- Optical networking rival Infinera (INFN +4.5%) is also higher. The company recently launched a solution it claims can automate/control both the digital switching and optical transport layers of an optical network. The solution, part of a broader trend towards building networks that offer more optical layer intelligence and flexibility, is expected to ship in September.
- Ciena's FQ1 results, PR
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Feb. 18, 2014, 1:59 PM
- Ciena (CIEN +4.7%) is now up 13% since announcing a major reseller deal/product partnership with mobile infrastructure leader Ericsson on Friday morning. PT hikes from Nomura, Evercore, and MKM are contributing to today's gains.
- Nomura's Stuary Jeffrey has upped his Ciena FY16 (ends Oct. '16) EPS forecast to $2.33 from $1.92, and predicts the Ericsson deal will lift Ciena's EMEA/Asia-Pac share by 2%. He expects the gross margin for Ericsson-related revenue to be 500 bps lower than for other sales, but (given Ericsson is handling much of the sales burden) also thinks the opex-to-sales ratio will be half that for other business.
- Citi's Ehud Gelblum sees the deal improving Ciena's reach in emerging markets and Asia-Pac, where its presence has historically been limited. He also expects Ericsson to boost sales of Ciena's carrier Ethernet gear for wireless backhaul deployments.
Feb. 14, 2014, 9:22 AM
- Ciena (CIEN) is partnering with mobile infrastructure giant Ericsson (ERIC) to jointly develop integrated Ethernet/optical networking solutions (i.e. packet-optical), as well as carrier software-defined networking (SDN) offerings.
- As part of the deal, Ericsson, which counts most of the world's top mobile carriers among its clients, will resell Ciena's 6500 packet-optical systems and 5400 reconfigurable optical switches. The companies are looking to address carrier needs for more powerful/intelligent back-end infrastructures as mobile data traffic continues soaring.
- Ciena's packet-optical sales rose 16% Y/Y in the October quarter, and accounted for 60% of revenue. Its SDN business is still in its early stages - though many see tremendous long-term potential for the technology, large-scale carrier SDN adoption isn't expected before 2016.
Feb. 14, 2014, 9:13 AM
Jan. 21, 2014, 1:42 PM
- 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.
Jan. 9, 2014, 12:59 PM
- Calix's Q4 warning, which has come in the wake of warnings (I, II) from fellow telecom equipment suppliers Cyan (CYNI -2.4%) and Procera (PKT -2.6%), has sparked a general selloff in telecom equipment and component/chip names. A Deutsche downgrade of Alcatel-Lucent, one of the best-performing names in the space in 2013, could also be playing a role.
- Calix, Cyan, and Procera all have considerable exposure to U.S. carriers not named AT&T or Verizon. While Calix didn't mention which region(s) are responsible for its warning, Cyan blamed an 88% Q/Q drop in sales to U.S. telco/top customer Windstream, and Procera blamed soft demand from U.S. cable providers.
- Notable decliners: CSCO -1.1% JDSU -5.2%. ADTN -5.1% (competes with Calix). FNSR -4.2% (just announced an acquisition). INFN -2.9%. AMCC -2.5%. CIEN -2.4%. BSFT -6.1%. SONS -2.1%.
- The group sold off a month ago after Cisco cut its long-term growth outlook.
Dec. 30, 2013, 7:46 PM
- As part of its major Domain 2.0 infrastructure project, AT&T (T) has sent a request for information (RFI) to equipment suppliers asking them to submit ideas and architectures that support software-defined networking (SDN) - the shifting of network intelligence to software-based controllers that interact with switches/routers.
- MKM's Michael Genovese predicts AT&T's RFI will likely "have significant long-term consequences" for the telecom equipment industry. He sees the impact being "most negative" for Cisco (CSCO), and a positive for Ciena (CIEN), F5 (FFIV), Finisar (FNSR), and early data center SDN software leader VMware (VMW, EMC)
- AT&T, like others, is enthusiastic about SDN's potential to lower management costs, improve network efficiency, speed the provisioning of new services, and allow "white box" switches/routers to take the place of proprietary hardware.
- The last feature has many Cisco investors nervous, given its potential to increase competition and pressure margins. John Chambers has declared white box hardware (already embraced by many Web/cloud companies) to be a major long-term threat.
- Cisco is counting on its powerful Insieme hardware/software and ACI architecture (meant to adapt to the needs of apps/services) to help neutralize the SDN threat. But Genovese thinks ACI "seems too complex and proprietary compared to more white box-oriented architectures."
- Regarding VMware, Genovese believes the company's NSX platform (combines SDN with other features) has "a strong chance of being selected as the Data Center virtualization platform." Strong uptake is expected for NSX, which has won the support of many Cisco rivals, starting in 2015. Major carrier SDN adoption is expected to arrive later.
Dec. 20, 2013, 1:34 PM
- FBR's Scott Thompson has started coverage on Infinera (INFN +1.6%) with an Outperform and $12.50 PT. He expects the optical networking space to "experience stronger performance in 2014 versus 2013" thanks to several catalysts he expects will "one of the strongest optical cycles the industry has seen in more than two decades."
- Thompson also reiterates an argument he made in a Dec. 4 note on Ciena (CIEN +2.3%): That telecom networks are migrating towards architectures that offer greater optical layer intelligence/flexibility, and in doing so require less money to be spent on switches/routers.
- Thompson thinks this architecture shift is partly responsible for the recent weakness seen in Cisco's (CSCO +0.6%) service provider sales.
- As for Infinera, a major player in the 100G optical transmission space, Thompson declares the company to have the strongest exposure to the optical segments where "the shift will be the most pronounced."
- In addition to Infinera and Ciena, a couple other optical networking hardware vendors are doing well on a good day for tech, as are some component suppliers. CYNI +4.3%. AFOP +5.9%. OPLK +2.8%. OCLR +2.4%. ADTN +1.9%.
Dec. 13, 2013, 9:38 AM
- Amazon (AMZN +1.3%) has been upgraded to Strong Buy by ISI.
- Stratasys (SSYS +2.5%) has been started at Overweight by Stephens.
- Ciena (CIEN +1.5%) has been upgraded to Outperform by BMO a day after posting mixed FQ4 results and slightly disappointing FQ1 revenue guidance (midpoint below consensus).
- Ubiquiti (UBNT +1.1%) has been started at Outperform by Wells Fargo.
- Procera (PKT +2.1%) has been started at Buy by D.A. Davidson.
- China Mobile Games (CMGE +3%) has been started at Buy by Brean.
Dec. 12, 2013, 7:31 AM
- Ciena (CIEN) tumbles 11.5% premarket after a big miss on FQ4 results - reporting adjusted EPS of $0.16 per share vs. expectations of $0.24.
- Adjusted gross margin of 40.8% compares to 43.6% the previous quarter. Adjusted operating margin of 4.7% falls from 8.2% the previous quarter. Operating expenses rose to $210.5M from $190.4M.
- FQ1 revenue guidance of $515M-$545M is inline with Street expectations.
- The company will swap its Nasdaq (NDAQ) listing for one on the NYSE (ICE). The stock symbol will remain the same.
- FQ4 results, press release
- CC at 8:30 ET
Dec. 12, 2013, 7:01 AM
Dec. 12, 2013, 12:05 AM
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