Infinera says focus on content providers, metro 100G helps overcome challenging carrier spending environment

Infinera says a diverse customer base has helped it weather what has continued to be a tough carrier spending environment in the recent year.

Speaking to investors during the William Blair & Company 2015 Growth Stock Conference, Brad Feller told investors what has helped them weather the environment is by not putting all of its focus on just the Tier 1 service providers.

"I think people too much historically focused on the Tier 1 carrier capex," Feller said. "The reality is if you look at what's moving the world today it's the Internet content guys, it's the content guys, and the wholesale carriers."

Feller added that "we stay very close to the Tier 1 customers, but we see where the puck is moving. It's the guys that are driving very big networks the fastest."

On a quarterly basis, Infinera does not rely on one large customer to drive all of its revenues.

This concept was clearly seen in its first quarter results. A rise in sales across various customer verticals drove up Infinera's overall Q1 revenue on both a sequential and year-over-year basis, to $186.9 million, from $186.3 million in Q4 2014 and $142.8 million in Q1 2014.

"We also have a diverse customer base, which includes 7 customers that are greater than 10 percent in a given quarter," Feller said. "I am not overly reliant on one guy to drive my revenues on a quarterly basis, meaning I can have a large integrated communications provider or a large cable guy who does not buy at all in a quarter and I am still fine."

At the same time, Infinera has been diversifying its product sets and focus. A key element of this diversification will be focused on applying 100G optical platforms to other market opportunities, including the metro and data center interconnection.

To make a greater foothold in the metro market, Infinera is in the process of purchasing Transmode, a company that has developed products that focus mainly cover application specific features including broadband aggregation, wireless backhaul and fronthaul along with business Ethernet services.

Within the metro, one of the key applications that Infinera sees the data center interconnection market as one where it could deepen its ties with the content providers and data center providers like its current customer Equinix.

Content providers like Microsoft recently told attendees during the OFC show that they need hundreds of thousands of 100G wavelengths in between their data centers, for example.

"If you look at what the Internet content providers are doing by building these major data centers, these facilities include half a million to a million servers at a site running at high availability and high utilization," Feller said. "If you take the bandwidth of one of these facilities, it's the equivalent of several large cities several times over."

For more:
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