Infinera forecasts profit and a metro platform

Optical transport systems vendor Infinera Corp. (NASDAQ: INFN) said its fiscal second quarter, which ended June 29, 2013, saw continued progress toward its revenue and gross margin goals for the year. That progress should continue into the current quarter, which company management predicted would show a profit on a non-GAAP basis.

The systems house reported $138.4 million in revenue in 2Q13 versus $124.6 million in the previous quarter and $93.5 million in the second quarter of 2012. The figure was in the upper end of Infinera’s guidance of $130 million to $140 million. GAAP gross margin for the quarter was 37%, better than the 34% of 1Q13 and the 35% seen in the year-ago quarter. GAAP net loss for2Q13 was $10.0 million ($0.09 per share), versus a net loss of $15.3 million ($0.13 per share) in the previous quarter and a net loss of $29.5 million ($0.27 per share) in the second quarter of 2012.

Non-GAAP numbers for the recently concluded quarter included gross margin of 39% and a net loss of $1.2 million ($0.01 per share).

Again, the success of the DTN-X platform accounted for the improved figures. Infinera received DTN-X orders from seven customers, including three new to the company. There are now 34 customers who have signed up for the packet-optical transport system, according to Infinera CEO Tom Fallon. He said that, in North America, the company had seen success with cable and Internet content providers. The company also secured wins in Korea, Japan, and Vietnam.

Fallon added that one new DTN-X customer is a European Tier 1 carrier that he declined to name. However, he did reveal that Deutsche Telekom has begun to deploy the DTN-X in its network.

Looking forward, Infinera expects the positive momentum to continue at least through the current quarter. CFO Ita Brennan told participants in last night’s analysts call that the company expects revenues to range between $135 million and $145 million. Non-GAAP gross margins should fall between 43% and 45%. Operating expenses should come in at approximately $55 million, leading to operating income of approximately $3 million to $10 million. And, voila, that means a non-GAAP net income of approximately $2 million to $9 million ($0.01 to $0.07 per share). Yes, non-GAAP profitability.

Meanwhile, the company is working on a new metro product. While noting that some customers are pairing the ATN as an aggregator with the DTN-X, Fallon told participants on last night’s call that the company is working on photonic integrated circuits (PICs) for a new metro platform. The PICs should be ready this year, but Fallon declined to say when the metro platform, which he described as a “complement the DTN and the ATN,” would debut.

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