Thanks Mike,
I think Creelon (The other Mike) has a good handle on Infinera. But as far as you obsessing over operating expenses, I think it is great that you want them to control costs, but the telecommunications equipment business does have a lot of op ex built into it. For instance Infinera is vertically integrated so they have their own manufacturing plants. They also need to ship their equipment to where it is being installed and then pay for 2 installers time, about 2 weeks, to install the equipment. So it is capital intensive but not as bad as the old days. The equipment is smaller and goes in a lot faster now.
I do not think it is helpful to compare Infinera to a software company because they are two very different business models. But I do think it is helpful to compare them to other people in their business. So Ciena would be a good company to compare them to.
http://investor.ciena.com/phoenix.zhtml?c=99134&p=irol-n…’ target=
Looks like Infinera is eating their lunch.
http://s21.q4cdn.com/892601718/files/doc_financials/quarterl…
And then there was Alcatel Lucent which has now been bought out by Nokia. You can still look at their financials up to Q3 2015 and they were operating at a loss.
So Mike I think it is important to look at costs but to compare them across the industry. Telecommunications has been a very cyclical type of business and you have to be careful not to be in it when the cycle runs out. With all the data right now, though, I do not see the cycle ending any time in the next two years.
I hope that is helpful,
Thanks,
Andy