Ciena Chief Calls Infinera 600G Uncompetitive Amid Strong Q4

Infinera‘s 600G optics lack the competitive advantages necessary to steal away market share from Ciena, president and CEO Gary Smith assured investors during the company’s fourth-quarter 2019 earnings call. Infinera‘s 600G optics lack the competitive advantages necessary to steal away market share from Ciena, president and CEO Gary Smith assured investors during the company’s fourth-quarter 2019 earnings call. “This is just not enough benefits in terms of speed and reach of 600G,” he said, according to a Seeking Alpha transcript. “Frankly some of the stuff that’s coming out is really only competitive with WaveLogic AI, which has been in the market for two to three years now.” He also dismissed concerns that the 400G cycle was coming to an end, and that the rollout of 800G and WaveLogic 5 were critical to maintaining the company’s rapid rate of growth. “Folks that are fiber constrained and have high bandwidth growth demands will always go to the highest performance optics, and that will be WaveLogic 5 in the very, very, very near future,” Smith said, adding that the 400G cycle is just getting started. Smith reminded investors that while 800G might be the marquee feature of WaveLogic 5, its benefits extend to 400G deployments too. “Being able to ship or be able to carry 400G anywhere on the globe without having to regenerate it is a key value proposition of WaveLogic 5,” he said. And during the call, Smith repeatedly expressed confidence Ciena will have its 800G WaveLogic 5 chips in customers’ hands before the end of first quarter 2020 with revenues from those sales expected to begin flowing sometime early in the second quarter 2020. According to a note from Jefferies, the rollout of WaveLogic 5 will be critical to re-establishing Ciena’s price-to-performance advantage. Ciena rang in the fiscal year-end with a healthy fourth quarter that sent its stock price surging more than 18% on Thursday. “Q4 marked a strong end to an extraordinary fiscal 2019,” said CFO Jim Moylan during Thursday’s earnings call. The company posted $968 million in revenues in the fourth quarter, up 7.6% year over year, and beating expectations by $1.72 million. Meanwhile, annual revenues increased 15% from the prior year, at $3.57 billion, almost twice the company’s target of 6% to 8% growth. Moylan expects to continue this trend into 2020 and beyond with growth expected to continue to grow at 6% to 8% each year. Ciena is projecting between $805 million and $835 million in revenues for the first quarter of 2020, which Moylan notes is consistent with seasonal trends historically. “We are the established market leader in our space,” Moylan said. “We continue to deliver consistent, differentiated financial performance and we intend to press down aggressively on our competitive advantages, including our leadership in technology.”