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Infinera Corporation (INFN)

  • Wed, May 27, 4:38 AM
    • As the telecom-network industry consolidates, Ericsson (NASDAQ:ERIC) is now more open to a bigger M&A deal in order to remain competitive in the market, Bloomberg reports.
    • "I see no reason why we, given the right preconditions, would exclude a larger deal," Ericsson Chairman Leif Johansson said in an interview this month. "But as you know, there aren't that many left."
    • CEO Hans Vestberg plans to gather with his top managers in June to discuss strategy, and a key area is what the company can do to counter Nokia's recent $16.6B acquisition of Alcatel-Lucent.
    • Possible targets: Ciena (NYSE:CIEN), Infinera (NASDAQ:INFN) and Juniper (NYSE:JNPR)
  • 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
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  • 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.
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  • 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%.
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Company Description
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.