Tue, Apr. 14, 10:17 AM
- Optical networking hardware vendors Ciena (CIEN +5.7%) and Infinera (INFN +2.4%) are higher after Nokia stated it's in talks to merge with Alcatel-Lucent, sparking hopes more telecom equipment industry M&A could be on tap. Microcaps MRV Communications (MRVC +9.7%) and Zhone (ZHNE +6.9%) are also faring well.
- Ciena and Infinera both compete against Alcatel in the optical transport/switching market. The Street might be betting Ericsson or another rival will respond to a Nokia/Alcatel deal by making an optical acquisition.
- Infinera (rallying less than Ciena) is a week removed from making a $350M+ bid for Swedish metro optical hardware vendor Transmode. Analyst reactions to the deal, which stands to significantly increase Infinera's metro market reach and European customer base, have been fairly positive
Thu, Apr. 9, 10:26 AM
- Infinera (INFN +1.4%) has offered $96M in cash (offshore?) and 13M shares (current value of $255M) to buy Swedish optical networking hardware vendor Transmode. The deal, which needs the support of Transmode shareholders owning over 90% of the company, is expected to close in Q3, and be accretive to 2016 EPS.
- Transmode has issued a statement backing Infinera's bid. Top Transmode shareholder Pod Investment (33% stake) backs it as well. If/when the deal closes, Transmode shareholders will own 8.7% of the post-merger company.
- Infinera trumpets Transmode's strong position in the metro optical transport market - though having metro exposure, Infinera is stronger in long-haul. Infinera declares a deal will allow it to offer an end-to-end WDM transport portfolio, and go after 100G metro deployments expected to ramp in 2016. Verizon recently gave a major 100G metro contract to rivals Ciena and Cisco.
- The companies also have limited customer overlap - Infinera depends heavily on North American sales, Transmode on European sales - and Infinera sees an acquisition yielding cost synergies and better negotiating leverage with suppliers.
- Infinera is up moderately. Transmode is up 15.8% in Stockholm.
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%.
INFN vs. ETF Alternatives
Infinera Corp provides optical transport networking equipment, software and software services to Tier 1 and Tier 2 telecommunications service providers, internet content providers, cable operators, wholesale & enterprise carriers and government entities.
Other News & PR