Those who have been emphasizing metro I think are on the right track. If INFN's success is limited to transport and data center then they will be a mediocre investment. If they can marshal up some synergies to become a major player in metro, they should be a good investment.
How much will the stock price of INFN two years from now be affected by whether it is $12, $15, $20, or $25 today?
I would argue, virtually not at all.
And you don't even have to be a bull to agree with that. Suppose you are ultra bearish on INFN and feel it will be $10 two years from now. Would you feel any different about that if it were $20 today? It would make no sense to. And would you not agree that an investor would do better buying INFN at $12 and selling at $10 than buying at $20 and selling at $10?
But I would expect the stock will be $30 or higher 2 years from now. No matter where it is 2 years from now, I will do better on the shares I got at $12 than those I got at $20.
One of the recent causes of weakness is now pretty solidly established as a non issue. The non-coherent short range data center product. Just a small niche product, not competition for INFN of any appreciable significance.
INFN has not been dirt cheap but has been a decent value considering its growth prospects. But because of its great growth prospects it has not been cheap. And with a stock like that you expect a strong reaction to mild down or up blips from quarter to quarter. I bought some about 20, more at 15, and yet more today at 12. We've had several down blips.
Some quarters there will be up blips in the business and forecast similar to the down blips. Presumably then the stock will overreact on the upside just like it did today on the downside. Those will be the times to take profits.
At 12 INFN's enterprise value to gross profits ratio is about 4. I consider a ratio of 4 a reasonable valuation for a good solid tech company that has 5-10% annual growth on a sustainable basis.
For a much faster growth company like INFN, it's a great value.
A little turbulence here and there, lots of forces working toward this company doing awesome in the long term.
Synergystic benefits of Infinera+Transmode business clearly will take a few quarters to get the verdict on.
That short haul data center issue a month or two ago sounds like it it is of negligible significance.
Consensus- forward estimates determine the tenor of this quarterly. What I want is a persuasive story on how integration of the Transmode product line with Infinera's product line will put the metro products on a high growth path.
Not sure what the estimates were. Revenue growth of 31% relative to same quarter last year sounds great. But profits for those same periods slightly down doesn't sound so great.
Will Cramer mention INFN today? If up tout the company as a savvy tech. If down tout the company as overhyped. Not that him mentioning INFN would have much significance except to show it is more on the radar screen than it was a few years back.