Infinera's Fallon: There's a pent up demand for 100G

Infinera's CEO is seeing continual demand for 100G optical equipment from its mix of traditional telco and emerging data center customers for its Cloud Xpress product line. Speaking to investors during its second-quarter 2015 earnings call, Tom Fallon said customers see 100G as a key requirement.

"We probably underestimated the pent up demand for 100 Gig," Fallon said. "Some of the customers have said 'I'm just not going to deploy this now when I can get 100 Gig in Q3' so I am very optimistic I am going to sell a lot of that."

Fallon added that four out of its 12 Cloud Xpress customers have come back to purchase more equipment from this product line.

"Out the 12 customers we have, four have already come back for repeat purchase with new opportunities," Fallon said. "They are deploying them, they're happy with them and they are seeing more and more opportunities for this."

While some financial analysts have expressed concern about traditional service providers tightening their capex pocketbooks, Infinera remains confident that they will have to continue to spend dollars on enhancing their transport networks.

"As long as the demand to get data from data center to data center and data center to consumer keeps growing, I don't see any way they cannot continue to invest, particularly with the advent of 100G technology moving in which provides a lower cost infrastructure from a capex perspective on a bit basis, power basis, and on a space basis," Fallon said. "Maybe their capex elsewhere is going to be cut, but in fundamental transport I don't see it."   

Driven by ongoing sales of its DTN-X and the emerging Cloud Xpress platforms, Infinera reported second-quarter revenues of $207.3 million, up sequentially from $186.9 million in the first quarter of 2015 and $165.4 million in the second-quarter of 2014.

The company's GAAP net income for the quarter was $17.9 million, or 13 cents per diluted share, rising from $12.4 million, or 9 cents per diluted share, in the first-quarter of 2015, and $4.8 million, or 4 cents per diluted share, in the second-quarter of 2014.

Looking forward, Infinera has forecast third-quarter 2015 earnings of $210 million to $220 million and earnings per share of 15 to 19 cents, surpassing analyst estimates of $206.4 million and 16 cents per share.

Shares of Infinera were trading at $24.04, up 2.75, or 12.92 percent, in Thursday morning trading on the Nasdaq stock exchange.

For more:
- see the release
- listen to the earnings webcast (reg req.)

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