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24 October 2007


Infinera heads into underlying profit as it diversifies customer base

For third-quarter 2007, Infinera Corp of Sunnyvale, CA, USA, a vertically integrated manufacturer of digital optical networking systems incorporating its InP-based photonic integrated circuits, has reported revenue of $62.2m,
up 7% on Q2's $58.4m.

Invoiced shipments were $80.4m, up 17% on the $69.0m in Q2/2007 and 91% on the $42.0m in Q3/2006. On an invoiced shipments basis, non-GAAP gross margin (excluding non-cash stock-based compensation and warrant revaluation
expenses) was 43%, up from 37% in Q2/2007 and 21% in Q3/2006.

Net loss was $5.5m, down from $26.1m in Q2. However, non-GAAP results (on an invoiced shipments basis) show a net income of $10.9m in Q3/2007, compared with $2.7m in the prior quarter.

Infinera says that in Q3/2007 it had three 10% or greater customers, with the largest accounting for 28% of revenue on an invoiced shipment basis (compared to 48% in Q2/2007 and 55% a year ago).

The third quarter also saw Infinera add seven new customers, expanding its customer base to 38 (compared with 31 in the prior quarter). Customer wins included deployment of the company's equipment in the cable market
(Cox Communications) and the internet content provider market (OVH), demonstrating a broadening of the markets that the firm serves and building on its growth in the bandwidth wholesaler market (360 Networks, XO

*Infinera files for secondary public offering

The week before last, Infinera filed a registration statement with the Securities and Exchange Commission for an underwritten secondary public offering of about 5% of its common stock (worth about $125m).

The firm says it will use the proceeds for working capital and general corporate purposes, including financing growth, developing new products, funding capital expenditures, or expanding existing business through acquisitions of other businesses, products or technologies.

This June, Infinera raised $182m in its initial public offering ($209m after underwriters took up options). Since being founded as Zepton Networks Inc in December 2000, Infinera had already raised $315m in private equity funding.

The firm started to ship products in November 2004. Losses were $66.5m in 2004 (on $0.6m in sales), $64.8m in 2005 (on $4.1m in sales) and $89.9m in 2006 (when 75% of the $58.7m in sales came from just two companies: Level 3
Communications and Broadwing, which Level 3 bought in January). For first-half 2007, net loss was steady at nearly $46m while revenue almost doubled to $108m. However, excluding non-cash stock-based compensation and
warrant revaluation expenses shows an underlying improvement from a loss of $5.4m in Q1 to net income of $2.7m in Q2.

Infinera's large-scale PICs incorporate the functionality of more than 60 discrete optical components into a pair of InP chips that transmit and receive at 100Gb/s.

A preliminary prospectus can be obtained from the prospectus department of Goldman, Sachs & Co by e-mailing

See related items:

Infinera moves into underlying profit

Infinera’s $182m IPO exceeds expectations

Infinera prices IPO to raise $139m

Infinera files for IPO to raise up to $150m

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