Leading optical transport network developer Infinera Corp. (INFN) reported robust financial results for the third quarter of 2014. Both the top and the bottom lines outpaced the respective Zacks Consensus Estimate. Management expects the company’s newly launched Cloud Xpress product suite and its metro cloud market transition to pave the way for long term growth. Infinera currently holds a Zacks Rank #1 (Strong Buy).
Quarterly net income was $4.8 million or 4 cents per share compared with $3.3 million or 3 cents per share in the year-ago quarter. Adjusted earnings per share came in at 6 cents, significantly surpassing the Zacks Consensus Estimate of 2 cents. This was primarily attributable to higher gross profit and operating income.
Quarterly total revenue was $173.5 million, up 22.2% year over year and also above the Zacks Consensus Estimate of $171 million. Segment wise, Product revenues were $147.2 million, up 21.3% year over year. Services revenues were $26.4 million, up 27.5% year over year. Domestic revenues constituted 70% of the total and the remaining 30% was generated from the International markets.
Infinera, which provides digital optical networking systems to telecommunication carriers, cable operators and other service providers worldwide, competes directly with the companies like Ciena Corp. (CIEN), Alcatel-Lucent SA (ALU) and Cisco Systems Inc. (CSCO). Infinera’s newly launched Cloud Xpress system is expected to cut power usage by 50% compared to other metro cloud solutions.
During the first nine months of 2014, Infinera generated $17.2 million of cash from operations against $9.4 million in the prior-year period. Free cash flow in the first nine months of 2014 was $2.9 million against a negative $4.2 million in the year-ago period.
At the end of the third quarter of 2014, Infinera had $373.5 million of cash and marketable securities compared with $361.4 million at the end of 2013. Total debt, at the end of the reported quarter was $114.9 million compared with $109.2 million at the end of 2013. Debt-to-capitalization ratio, at the end of third-quarter 2014 was 0.20 against 0.21 at the end of 2013.
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