Would not be surprised to see a JPMC INFN upgrade within the next couple of days. Thought the transcripts of the conference were very encouraging. Solid business model, growth w/in industry sector spending / TAM , DTN-X catching on and potential for additional Tier 1 wins ...........
Yeah, just listened to the conf call, sounded pretty good. One point I was glad to hear and sounded credible is my concern about whether INFN had enough critical mass as a corporation to be a long-term winner in this field was pretty well addressed. Fallon made a good case that the industry views INFN as a company that will be around for the long term. He mentioned financial strength as one of the factors, INFN has cash, some companies don't, it made me realize, yeah, that is one reason I haven't invested in Ciena, the fact that they have debt. (Not that it raises concerns in my mind about Ciena's staying power as a company, but simply that net debt on the balance sheet leads me to see it as not as good a value investment-wise.)
Also liked the numbers regarding TAM. Hope I remembered these about right- believe he said TAM for the non tier 1 market they have competed in with DTN is about 2 billion, if you can compete in the tier 1 market that doubles to 4 billion, then there was a 6 billion figure, I think maybe that was what the 4 billion is expected to grow to in the next few years, and then there was a figure of 10 billion which if I recall correctly was how much that figure grows if you add the metro market along with long haul.
Anyway, sounds like a big market they will be competing in, and from previous discussions on this board it sounds like in the long run it will be a market with two players, INFN and CIEN.
When it came to tier 1's he said there is a perception that the horse is out of the barn while he claims that most tier 1s are going to look to carry multiple vendors and that most hadn't even picked their first yet let alone their second.
Not sure how that works in practice, if a telecom company is buying some INFN eqt and some CIEN I would think the architectural differences preclude mixing those within a given transport link.
Another point I found interesting was about capital cost. He indicated fab facilities for DTN were largely built early on and then increased capacity over time was simply achieved through improved yields. It sounds like DTN-X is expected to follow a similar pattern, and the outgrowth is that their capital requirements for factory capacity should be fairly modest going forward.