"To date, we have received purchase commitments for the DTN-X from ten customers, including three customers new to Infinera. These customers represent a cross section of our markets, including cable, subsea, internet content, research & education, and Tier 1 providers. Adoption of the DTN-X demonstrates customers' recognition of the unique differentiation of our leading next-generation platform which provides unparalleled scale, efficiency, simplicity and reliability at a reduced total cost of ownership. We remain on track to recognize revenues from DTN-X sales beginning in the third quarter. While we are growing more cautious regarding the macro-economic environment and the outlook for capex spending in the second half of 2012, we are pleased with the market acceptance of the DTN-X."
Just so I am clear (obviously the novice on this board), then this original message might not be 100% accurate -- there is a commitment to purchase DTN-X from 10 companies, but not actual purchases by 10 companies, and after my lesson on how revenue is realized by companies like Infinera... no revenue in this reporting period?
I agree that we're getting too caught up in PO technicalities. It's like we're trying hard to find some bad news. Given the competiveness of this category and the world economic outlook, this quarterly report and CC was a home run. INFN is going to be very successful.
Don't get hung up on PO or Commitments. Even after equipment is delivered and installed as a result of a PO revenue recognition may not occur for a few months. Customer acceptance usually occurs when the last software revision is shipped and accepted. Each contract/agreement is different with each customer. Just to add additional confusion to the world of Telecommunication. The reason companies do not announce dollar values of any contract win is because customers can increase or decrease the original amount based on business conditions. So as crappy as this all sounds it is the way it is. With the competitive nature of the business INFN is in they have to pretty much accept customers terms or they will simply find a supplier that will. Tough Love.
It's a corporate "head" game. When they use the word "commitments" they hope that investors and banks alike will view that as money in the bank but if those :commitments: fall thru, the company (infinera) can say that it's not their problem that people don't read between their "tricky" lines.
Interesting... I wonder why they didn't just differentiate in their press release or on the call - customer who have issued purchase orders and then number or type of customers from whom they have recieved commitments to purchase in the future?
I think "purchase commitment" were to words used.
I have never heard of "purchase commitment" as a valid/legal term used in accounting. But, "purchase order" is used regularly to refer to a legally binding contract which exists physically such as a piece of paper, or digital copy of such.
IMHO, purchase commitment is just a play on words which means nothing legally.