Nov. 13, 2013, 8:34 PM
- Cisco's (CSCO) dispiriting Jan. quarter guidance and Oct. quarter order data has produced an AH selloff in enterprise IT and telecom equipment names, as well as a couple of the companies supplying them. NetApp's below-consensus guidance might not be helping either.
- HPQ -2.1% AH. IBM -1.1%. ALU -2%. FFIV -1.9%. CIEN -0.9%. CAVM -3%. BRCM -1.3%.
- Cisco's slumping FQ1 service provider (-13% Y/Y) and emerging markets (-12%) orders are bound to fuel concerns about carrier capex and macro trends. At the same time, it's worth noting Juniper and Alcatel-Lucent have been seeing better router sales to carriers (though not to Asia), and that Huawei has been doing better in emerging markets.
- The rest of Cisco's order data for major regions and customer groups was relatively better, but not exactly encouraging. Americas orders -2%, EMEA -4%, Asia-Pac (hurt by emerging markets weakness) -9%. Enterprise orders +2%, commercial (SMBs) +1%, public sector -1%.
- Switch sales (31% of revenue) rose 3% Y/Y, while routers (17% of revenue) fell 1%. Collaboration rose 1%, and service provider video fell 14% due to set-top weakness. Cisco's ASR 9000 edge router line, which EZchip (EZCH) supplies network processors for, grew 20% in FQ1 vs. 43% in FQ4.
- Data center (UCS servers) had another strong quarter, growing 44%, but still only accounts for 5% of revenue. Wireless (dominated by Wi-Fi gear) grew only 8% after growing 32% in FQ4 (could be a negative for ARUN and RKUS).
- John Chambers was asked on the CC (transcript) if the NSA spying uproar was affecting Cisco. He admitted it's a problem in China, but denied it was a major issue elsewhere.
Oct. 30, 2013, 1:19 PM
- Several telecom equipment vendors and component suppliers are selling off in sympathy with Calix (CALX -22.7%) and Cyan (CYNI -31.8%), each of which is crashing due to the poor Q4 guidance (I, II) provided with its Q3 results. Both companies are heavily dependent on U.S. telco spending.
- Calix blamed its guidance on soft demand from tier-2 and tier-3 carriers, while Cyan blamed "cautious order patterns" caused by macro issues. On its CC (transcript), the company noted orders from top customer Windstream will be "substantially down compared to prior quarters."
- Notable decliners include Finisar (FNSR -7.3%), JDS Uniphase (JDSU -3%), Ruckus (RKUS -6.6%), Applied Micro (AMCC -3.8%), Procera (PKT -4.1%), Allot (ALLT -3.8%), Ciena (CIEN -2.7%), and Alliance Fiber (AFOP -7.7%). JDS and Ruckus report after the bell; Allot and Procera rallied yesterday in response to the former's Q3 report.
- Several industry names sold off last Thursday due to Infinera's soft Q4 guidance. Infinera said at the time it doesn't "expect significant budget flush or year-end money" from carriers.
Oct. 24, 2013, 11:44 AM
- Though its Q3 results beat estimates, Infinera (INFN -9.4%) guided on its CC (transcript) for Q4 revenue of $130M-$140M and EPS of breakeven to -$0.04, below a consensus of $141.1M and $0.03. Gross margin is expected to fall back to ~40% after rising to 49% in Q3 (+1000 bps Q/Q and Y/Y).
- While Infinera expects to benefit from "a number of significant new wins and deployments" in Q4, the company doesn't "expect significant budget flush or year-end money" from carriers.
- Moreover, while Infinera has won a number of new deals - five new purchase commitments were scored for its DTN-X optical transmission platform - deal timing "remains challenging because of [Infinera's] short lead times and the strategic nature of many of these customer decisions."
- Ciena (CIEN -7.3%) is selling off on the guidance and commentary, as are many optical component suppliers. Ericsson's numbers might not be helping either. CIEN -7.6%. FNSR -7.2%. JDSU -3.4%. NPTN -2.4%. OCLR -2.3%. AFOP -3.2%.
- Infinera also disclosed CFO Ita Brennan is resigning, effective Feb. 28, 2014, to work for a startup. The company says it will start a search for a replacement.
Oct. 23, 2013, 2:23 PM
- The soft Q4 top-line guidance provided with Juniper's (JNPR -5.9%) Q3 beat has led shares to fall below $20. Several peers are also off on a down day for tech: FFIV -4.3% (reporting after the close). DRWI -3.9%. PKT -2.8%. RKUS -2.6%. CIEN -2.4%. RVBD -2.2%.
- On its CC, Juniper attributed its guidance to U.S. federal weakness caused in part by the government shutdown, and called the macro environment "dynamic." The company also disclosed it's cutting another 280 jobs (~3% of its workforce) in Q4, and that it's in the "later stages" of its search for a replacement for departing CEO Kevin Johnson.
- Some of the job cuts are related to Juniper's decision to kill off its MobileNext 3G/4G infrastructure software line.
- The sell-side is nervous about declining enterprise sales, caused in large part by security share losses. Juniper promises a resumption of security growth in 2014; favorable comps should make that easier.
- Carrier routers continue to be a bright spot: MX series edge router sales rose 15% Q/Q, and core router sales 11% Q/Q. Both Cisco and Juniper have been seeing strong edge router demand in recent quarters.
- Juniper also states it's seeing healthy carrier demand in all three major geographies. However, Americas demand is generally stronger than EMEA and Asia-Pac demand.
Oct. 21, 2013, 10:55 AM
- Ciena (CIEN +2.1%) is rallying after struggling telecom equipment rival Tellabs announced it's being acquired for $891M by investment firm Marlin Equity.
- Ciena's market cap ($2.85B) is considerably larger than Tellabs', and (unlike Tellabs) the company has been taking share in recent quarters rather than losing it.
Oct. 9, 2013, 12:00 PM
- Adtran (ADTN -13.3%) guides on its Q3 CC for Q4 revenue to drop by a high single-digit to low-teen percentage Q/Q; that's worse than a consensus for a 7% decline.
- Shares have nosedived on the guidance after trading higher earlier today in response to the telecom equipment vendor's Q3 beat.
- Several other telecom equipment firms are also seeing sizable declines on a down day for tech, as are some component/chip suppliers. CIEN -4.3%. JDSU -3.9%. FNSR -4.5%. JNPR -2.8%. AMCC -3.8%. DRWI -4.7%. RVBD -3.3%.
Sep. 4, 2013, 3:01 PM
- Equipment vendors Adtran (ADTN +10.1%), Ruckus (RKUS +4.5%), Aruba (ARUN +2.5%), Ericsson (ERIC +2.2%), Procera (PKT +2.1%) and Calix (CALX +2.3%), and component/chip suppliers Oplink (OPLK +4.1%), NeoPhotonics (NPTN +2.3%), Alliance Fiber (AFOP +3.1%), AppliedMicro (AMCC +5%), and PMC-Sierra (PMCS +1.9%) have joined the ranks of names outperforming following Ciena's (CIEN +13.6%) strong numbers (fueled by strong demand for metro/edge networking hardware) and Juniper's upbeat conference comments about Q3 bookings and router demand.
- Ciena mentioned on its FQ3 CC U.S. orders were relatively strong (likely a sign of strong AT&T/Verizon spending), as North American carriers lead the way in adopting newer technology platforms (100G optical, integrated Ethernet/optical hardware, etc.), However, the company also claimed Europe is stabilizing, and that it's seeing new customer wins in Latin America/Asia.
- Ciena also touted its share gains, noting Heavy Reading calls it the leader in the fiber-based Ethernet access switch space, and that Dell'Oro ranks its first in the integrated Ethernet/optical market. However, it does look as if Ciena has lost some share in optical transport (revenue +15% Q/Q but -26% Y/Y). The company says new customer wins will lead transport growth to pick up.
Sep. 4, 2013, 9:29 AM
- Ciena (CIEN) expects FQ4 revenue of $550M-$580M, mostly above a $551.4M consensus.
- Sales of integrated Ethernet switching/optical networking gear (Converged Packet Optical) rose 3% Q/Q and 23% Y/Y in FQ3, and made up 56% of revenue. That could be a positive for Cyan (CYNI - previous).
- Ethernet switch sales (packet networking) +14% Q/Q and +104% Y/Y, and now 11% of revenue. Optical transport hardware +15% Q/Q but -26% Y/Y, and 12% of revenue. Software/services +7% Q/Q and +1% Y/Y, and 20% of revenue.
- As Cisco and Juniper can vouch, demand for metro/edge networking hardware (such as Ciena's converged packet optical gear and Ethernet switches) has been strong lately.
- Gross margin was 43.6%, +110 bps Q/Q and +400 bps Y/Y, and reversing FQ2's Q/Q decline. It's expected to be in the low-40s in FQ4. Opex -3.5% Q/Q and only +8% Y/Y, op. margin jumped to 8.2% from 3.7% in FQ2.
- International customers made up 37% of revenue vs. 43% in FQ2. Two customers (possibly AT&T/Verizon) accounted for 31.8% of revenue, nearly even with FQ2.
- Infinera (INFN) +6.9%, JDS Uniphase (JDSU) +2.5% and Finisar (FNSR) +2.8% in sympathy.
- Ciena also jumped following its FQ2 results. Needham's July call was on the mark.
- FQ3 results, PR
Sep. 4, 2013, 9:10 AM
Sep. 3, 2013, 10:30 AM
- BlackBerry (BBRY +2.1%) is rallying on hopes the Microsoft/Nokia blockbuster will increase its chances of being acquired as it continues evaluating "strategic alternatives," and reportedly seeks out a "Google-like" white knight.
- Deal optimism is overshadowing a bearish note from Raymond James: the firm has cut estimates through 2015, and (backing up a recent WSJ column) says checks indicate sell-through has been weak.
- Meanwhile, several smaller networking/telecom equipment makers have joined Alcatel-Lucent and Ericsson (previous) in outperforming, as investors speculate Nokia will use some of its Microsoft cash to strengthen NSN via M&A. Infinera (INFN +5.6%), Ciena (CIEN +3.5%), DragonWave (DRWI +4.8%), and Ruckus (RKUS +2.6%) are among the winners.
- Craig-Hallum thinks Nokia is now likely to buy Ruckus, a leading player in carrier Wi-Fi and an existing NSN partner.
Aug. 14, 2013, 7:07 PM
- Nasdaq-100 futures (QQQ, XLK) -0.5% AH after Cisco provides relatively light FQ1 guidance to go with an FQ4 beat, and also reports Asia-Pac/Japan orders were down 3% Y/Y (macro is blamed).
- Networking/telecom hardware vendors and some of their suppliers are naturally the biggest decliners. Many of them have run up strongly this year on hopes of gradually improving carrier capex and enterprise IT spending. ALU -3.3% AH. JNPR -2.4%. ARUN -1.4%. FFIV -2%. ARRS -2.4%. RVBD -3.2%. JDSU -1.6%. FNSR -2.8%. CIEN -2.2%. CAVM -2%.
Aug. 6, 2013, 5:20 PM
- Finisar (FNSR) expects FQ1 (July quarter) revenue of $266M and EPS of $0.30-$0.31, above guidance of $245M-$260M and $0.22-$0.26, and a consensus of $253.6M and $0.24.
- The optical component vendor mostly attributes its performance to "increased sales of 10G, 40G and 100G Ethernet transceivers for datacom applications." Demand for 10G data center hardware and 100G carrier optical networking gear has been growing rapidly. Telecom sales rose by $2M Q/Q.
- Though Finisar is halted, other industry names are up in AH trading. JDSU +4.4%. CIEN +2.8%. Other names that might rally in sympathy: INFN, NPTN, AFOP, OPLK, OCLR.
Jul. 18, 2013, 11:23 AMSeveral telecom equipment/component/chip names are ticking higher after Verizon raises its 2013 capex budget to $16.4B-$16.6B from $16.2B (a figure that disappointed investors when announced in January). CIEN +2.7%. JDSU +2%. JNPR +1.7%. SONS +2.3%. ALLT +2.5%. CAVM +1.8%. CALX +2.2%. The group sold off 3 months ago after AT&T lowered its 2014/2015 capex forecasts. It rallied last Thursday thanks to positive analyst commentary. | Comment!
Jul. 17, 2013, 10:47 AMOptical networking hardware vendors Infinera (INFN +2.7%) and Ciena (CIEN +1.6%) rally after William Blair starts coverage with an Outperform. Shares of both companies have soared over the last 3 months, fueled by strong earnings reports (I, II) and expectations of a surge in 100G transmission system deployments. Infinera's Q2 report arrives on July 24. | 1 Comment
Jul. 11, 2013, 4:03 PMTelecom equipment, chip, and component makers finish up strongly after Needham upgrades Finisar (FNSR +6%), Goldman upgrades Alcatel-Lucent (ALU +6.3%) and Adtran (ADTN +2.3%), and William Blair reports of positive F5 checks. Ciena (CIEN +10.1%), Riverbed (RVBD +4%), Calix (CALX +6.9%), Aruba (ARUN +5%), and JDS Uniphase (JDSU +3.6%), are among the top gainers. Needham says meetings with Finisar's chairman and CEO leave it impressed with the company's positioning and visibility. "Finisar seems more confident in its outlook than it’s been in a number of years." Goldman responds to Adtran's strong top-line results and guidance by declaring it "uniquely positioned to benefit" from a multi-year cable/DSL broadband infrastructure upgrade cycle. (previous) | 1 Comment
Jun. 19, 2013, 4:28 PMFinisar (FNSR) +8.9% AH following its FQ4 beat. FQ1 guidance is for revenue of revenue of $245M-$260M and EPS of $0.22-$0.26, mostly above a consensus of $248.9M and $0.20. A 150 bps Q/Q increase in gross margin to 32.2%, caused by a favorable mix, contributed to the EPS beat. Finisar says it's seeing strong demand for 10G/100G Ethernet components for datacom gear - 10G is being rapidly adopted in data centers, and some firms are starting to embrace 100G. Opex +4% Y/Y. a little above rev. growth of 2%. JDSU +3%, NPTN +4.3%, and CIEN +1% in sympathy. FN, OCLR, and OPLK could also rally. CC at 5PM ET (webcast). (PR) | Comment!
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