After Derailment and a Leap of Faith, Infinera Is a Market Leader Again
By Fil Zucchi May 20, 2013 9:51 am
Infinera's decision to bypass an entire product cycle and bet the farm on the transition to 100 GB technology appears to be paying off.
The first time around INFN’s potential was stunted by the financial crisis, and its subsequent decision to bypass an entire product cycle and bet the farm on the transition to the 100 GB technology. By all indications the gamble appears to be paying off. INFN is rolling out a best-in-class solution, and barring another macro disaster the runway for INFN DTX-N boxes and blades should last several years. If INFN merely returns to the 2008 revenue and profit run rates, and its stock is given the same kind of valuation it garnered back then, there is 50 to 70% upside within the next 24 months. More blue chip customer wins and/or a higher multiple could reasonably push the stock back to its all-time high in the mid-$20s. I have a significant long position, which I hedge periodically with long-dated put options as insurance and for cash flow.