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Infinera Corporation Message Board

  • byronangel byronangel Apr 26, 2013 9:49 AM Flag

    ALU burns through another 533 million euros

    ALU reported a fourth straight quarterly loss as its cash pile shrank by half a billion euros, pressing new Chief Executive Officer Michel Combes to complete a strategy review. The operating loss was wider than projected.

    There is “still significant balance sheet risk over the immediate to long-term” at Alcatel-Lucent, said Jefferies & Co. analyst George Notter.

    The importance of this for INFN can't be overstated. Alcatel has been a supplier of optical networking gear to many of the world's Tier 1 service providers. All of these service providers are now in the process of deciding who their 100G suppliers will be. I doubt if very many of these service providers are going to want to be making a long term committment to a company that may be either about to get out of certain lines of business or that may be going out of business altogether. This is a huge opportunity for INFN with its very strong balance sheet to gain Tier 1 customers.

    Sentiment: Strong Buy

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    • 2013: Is This the Year Alcatel Goes Bankrupt?

      By Rich Smith - April 26, 2013

      Alcatel-Lucent (NYSE: ALU ) reported Q1 2013 earnings Friday and -- there's no sugarcoating this -- the news was not good.

      Nearly a year into a much-ballyhooed program to right its ship and save its business, the company's still losing money and burning cash like mad. Four months after negotiating a financial lifeline from Goldman Sachs and Credit Suisse -- bankers who, if you ask me, would be just as happy to see Alcatel fail and forfeit its patent portfolio -- the company's just piling more debt atop an already top-heavy debt load.

      In Q1 2013, operating cash flow at the firm ran negative to the tune of $188 million, while cash flow from operating activities -- which Alcatel defines differently from OCF -- came to negative-$542 million. This is significant, because when you pair this operating cash burn with Alcatel's spending on capital investments, it works out to a total of $694 million in negative free cash flow for the quarter.

      To put that number in context, $694 million is more cash than Alcatel burned in all of 2012 or 2011. It's nearly as much cash as the company burned through in 2010 ... and this time, the company burned all this cash in just one single quarter.

      To put that number in even more context, $694 million is quite literally the most cash Alcatel has ever burned in any single quarter at any time in the past 10 years. (You actually have to go all the way back to the bad old days of the Bubble Burst -- 2001 -- to find a quarter in which Alcatel's performance was more horrendous.) And of course, thanks to all this cash burn, and all this lack of cash generation, Alcatel now officially has more debt on its books than it does cash.

      I mean, I hate to say it, folks -- and I've never said it before -- but the more I look at the numbers, and how fast they're worsening, the more I begin to think: This really could be the year that Alcatel goes bankrupt.

      Sentiment: Strong Buy

    • Today Jefferies has reiterated their "Underperform" rating on ALU. They have an 84 cent price target on the stock. You have to wonder how many Tier 1 service providers are going to want to do business with a company whose stock price may be headed towards 84 cents.

      Sentiment: Strong Buy

    • Yes, the telecom business sucks. It's actually similar to Infinera. Infinera managed to burn $21M in cash on $125M in revenue. That's about 17%. Alu burned $533M euro on $3.2 billion euro revenue. That's about 17%. On quarterly losses of course, Infinera has many more straight quarterly losses than ALU. I think their last (and only) quarterly profit was in 2008.

      • 3 Replies to iluvglw
      • INFN didn't burned the cash, the cash was transformed into inventory also INFN used cash for operations because the payables came later. You are the resident board 1d1ot. What a clown !

        Sentiment: Strong Buy

      • Ita M. Brennan - Chief Financial Officer and Principal Accounting Officer
        While we experienced the typical first quarter slow start to bookings, momentum built as we move through the quarter. We exited the quarter with increased backlog versus the end of Q4, projecting robust sales of our DTN-X platform combined with continued deployments of the DTN.
        Now turning to the balance sheet. Cash, cash equivalents, restricted cash and investments ended the quarter at $164.9 million, down from $187.6 million in Q4. We used $21.3 million of cash from operations in the March quarter, a significant swing from generating $8.3 million in Q4. While we approached EBITDA breakeven on the income statement, working capital management this quarter was a challenge. There were a number larger deals that booked later than expected in the quarter. This resulted in cash payment for inventory purchases that were not matched with collections in the period.

      • and infinera gross margins are on the upswing from 37-39% on their way to 45%+ while alu optical gm are 17%

        which horse you betting on to make money moving forward?

    • At Light Reading, Ray Le Maistre has the following take on the ALU situation:

      News Analysis
      Alcatel-Lucent CEO Preps Kill List
      April 26, 2013 | Ray Le Maistre

      It looks like make or break for Alcatel-Lucent in 2013. The company has started the year with a first-quarter net loss of €353 million (US$460 million) and a strategic review of its businesses and operating model, the results of which are set to be unveiled by new CEO Michel Combes in "early summer."

      The vendor has already offloaded one small asset this week and a fresh review of the company's multiple operating units was inevitable.

      Now the company's staff, customers, partners and rivals will be scouring the first-quarter results, looking for clues as to which of the vendor's operations might get harpooned with a "For Sale" or "Closure" sign.

      It's the Networks & Platforms business group that will likely get the most attention from Combes, as it forms the rump of the company. In the first quarter it generated revenues of €2.7 billion ($3.52 billion), 84 percent of the company's total revenues of €3.23 billion ($4.2 billion).

      On the evidence of the first quarter, the optical equipment division within that group might have something to worry about: Its revenues fell by 15.6 percent compared with a year ago to €342 million ($446 million), while the rest of the Networks & Platforms divisions (including IP, wireless and fixed networks) all reported sales growth compared with a year ago.

      To put the optical division's performance into even clearer perspective, one of its main rivals just reported a better than expected first quarter and a bullish outlook for the full year. (See Infinera Prepares for a Big 2013.)

      This could be it for the optical equipment division at ALU. INFN's DTN-X is far and away the best product on the market and now INFN has a very good shot at winning every single one of ALU's optical customers.

      Sentiment: Strong Buy

8.63+0.02(+0.23%)Aug 26 4:00 PMEDT