A brief history of the oclaro connection

October 6, 2015:


Infinera overhauls product line, launches end-to-end solution

With Infinera’s (NASDAQ:INFN) $300M+ acquisition of Swedish optical networking peer Transmode on the books, the company has rolled out an end-to-end solution pairing Infinera’s bread-and-butter DTN-X long-haul optical transport systems with Transmode’s TM-series packet-optical (integrated Ethernet/IP and optical networking) metro systems. The solution is enabled by new 100G modules for the DTN-X line that communicate with Transmode’s gear.

October 22, 2015:


Infinera posts 5.3% gain after Oclaro pre-announces strong results
Infinera (NASDAQ:INFN) has been a tech standout today after optical component vendor Oclaro pre-announced above-consensus calendar Q3 sales, while stating it saw “strong growth in our 100G product portfolio” and better-than-expected 10G/40G sales. The Nasdaq is up 1.5%.

Infinera’s Q3 report arrives on Oct. 27. 100G upgrades have been a major tailwind for the company’s long-haul optical transport system sales. A 100G product line refresh (covered both metro and long-haul products) was announced earlier this month.

October 28, 2015:


Why Shares of Infinera Corp. Jumped on Wednesday

The company beat estimates for revenue and earnings and provided strong guidance for the fourth quarter.

What: Shares of Infinera (NASDAQ:INFN) jumped on Wednesday following the company’s third-quarter earnings report. Both revenue and EPS came in above analyst expectations, and the company’s guidance for the fourth quarter was stronger than expected. At 12:15 p.m. Wednesday, the stock was up nearly 13%.

So what: Infinera reported quarterly revenue of $232.5 million, up 34% year-over-year and about $8 million higher than analysts were expecting. Infinera’s results include the impact of the acquisition of Transmode, which closed on Aug. 20.

CEO Tom Fallon praised the company’s strong results: “Our excellent third quarter results reflect continued strength across our core business, including growing Cloud Xpress revenues as well as the initial contribution from the new metro business. Adding the recently announced metro core and long haul interconnect products along with Transmode’s suite of metro solutions enables Infinera to further enhance the superior experience we deliver to our customers.”

Now what: In addition to reporting strong third-quarter results, the company provided solid guidance for the fourth quarter. Revenue is expected to be in the range of $253 million to $263 million, up 39% at the midpoint and higher than the consensus analyst estimate of $250 million. Non-GAAP EPS is expected to come in at $0.21, plus or minus two cents, above the $0.19 analysts were expecting.

Infinera’s strong report comes about a week after optical component vendor Oclaro(NASDAQ:OCLR) pre-announced a better-than-expected first quarter, news that sent shares of Infinera higher. Strong growth of Oclaro’s 100G products drove the company’s results, and earlier this month, Infinera announced a 100G product refresh.

The connection? Infinera uses Oclaro’s 100G modules to connect their PIC-based solutions (DTN-X, Cloud Xpress) with Transmode’s metro gear for the two to communicate. Tonight, Oclaro reported a strong revenue and earnings beat, largely due to extremely high demand for their 100g products. Below are some snippets from the earnings call transcripts.

February 2, 2016:


Greg Dougherty
Thanks, Jim. Thank you, everyone, for joining today’s call as we report the results for our second fiscal quarter for 2016. I am pleased to report another strong quarterly results generated by the Oclaro team. In our second quarter, we grew our revenue by 8%, led by a 21% increase in our 100G product sales. Fueled by the strong revenue, we delivered non-GAAP gross margin of 29% and adjusted EBITDA of $9 million, both of which exceeded our guidance.
Revenue for the quarter came in at the high end of our guidance at $94 million. This was our second quarter in a row with revenue growth of 7% or higher. This improvement was driven by the second straight quarter of 20% sequential growth from our 100G product portfolio, representing $50 million for the quarter or 53% of our total sales. When compared with one year ago, we grew our 100G revenue by $16 million in the quarter.

Our focus on 100G and higher speeds has positioned us well for further revenue growth. As you will hear later, we expect that our 100G revenue will continue to grow at a healthy rate in Q3. We saw both our client and line side businesses grow in the quarter. Line side revenue was $43 million, up almost 8% from last quarter. Client-side revenue came in at $50 million, up about 7% when compared to Q1. Our entire 100G product portfolio contributed to this growth.

Pete Mangan
Thanks, Greg. Today I will provide a few comments on our second quarter of fiscal 2016 which delivered improvements in revenue, gross margin and also a positive net income and then closed with the guidance for the third quarter.
Here are a few highlights for the second quarter. Q2 net revenue of $94.1 million grew 8% compared with $87.5 million in the prior quarter. In the quarter, 100 gig grew 21% or $8.7 million which more than offset a decline in 10 gig and lower speeds which were down 7% or $2.6 million. As a percentage of total revenue, 100 gig represents 53%, 10 gig and lower 35% and 40 gig, 12%.
Our Datacom business was consistent with Q1, with 54% of sales and telecom, 46%. Within our customer mix, we had three customers with greater than 10% of sales and they contributed 21%, 16% and 10%, respectively. Regional sales came in with China at 37%; Americas, 35%; Europe, 16%; Southeast Asia, 10%; and Japan, 1%. Our Q2 non-GAAP gross margin was 28.8% compared to 26.4% in the prior quarter.
Now, turning to our guidance for the third quarter of fiscal 2016 ending on March 26, 2016. We currently expect revenues in the range of $97 million to $103 million. We anticipate Q3 2016 to include similar sequential growth in 100 gig revenues.

Greg Dougherty
Thanks, Pete. As you all know, the March quarter is typically a down quarter due to the annual price negotiations which took place toward the end of last year. The fact that we’re offering a strong guide for our Q3 is further validation of our successful 100G product portfolio.
Given the fact that we guided the combined 10G and 40G businesses to be down by 10% to about $40 million for the March quarter, you can quickly extrapolate to another quarter of approximately 20% revenue growth of our 100G product lines. We expect to see strong demand for our 100G products through this calendar year, driven by several projects in China, continued success for 100G client-side products, increased market share for our micro-ITLA lasers and modulators and the production ramp of our CFP2 ACO products.

We see the market being strong for both the client and the line side. As we previously discussed, we’re seeing very strong demand from China. A lot of the commentary has been about the China Mobile award which involved over 21,000 line side 100G parts. Most of the delivery for this project is scheduled for Q1 and Q2 of this calendar year.
On top of these developments, we have seen additional demand, driven by contract awards from China Telecom and China Unicom which have deliveries slated for Q2, Q3 and later in calendar 2016. While much is said about the number of 100G long-haul ports, please remember that a meaningful ratio of 100G client-side interfaces is also required.
The 100G client interface being deployed in China in 2016 is a CFP LR4 product. And Oclaro was clearly the market leader for this product for both single and dual rate. In addition to the long-haul contracts in China, there are also numerous other provincial and small city or metro projects happening as well. These projects are also generating strong demand for our micro-ITLA lasers, lithium niobate modulators, various 10 gigabit tunable components and modules, as well as our 100G client-side transceivers.

This demand is expected to remain robust for at least the next few quarters. We’re also seeing very strong demand from North American and European router and optical companies for the 100G LR4 products. Many customers appear to be moving away from 10G muxponder cards and going towards native 100G client interfaces. As a result of all these factors, we’re again increasing our capacity for our CFP family of products which is the CFP, CFP2 and CFP4. This is our third capacity increase in the last 18 months.

Given that Ciena reported a month ago, and provided weak guidance for the coming quarter, that demand for 100G LR4 units from “North American and European router and optical companies” has to be coming from somewhere. Any ideas?