stocks industry
and 2009 the Albuquerque-based firm issued a raft of press releases claiming substantial orders for its triple- junction cells from firms across the globe, but in many cases these bookings never translated into sales. In the most recent set of quarterly results photovoltaic revenue was worth just $16.8 million, a $0.4 million sequential rise. But this gain resulted from a 14 percent increase in satellite business; CPV sales were down compared to the previous quarter. It’s fiber-optic division brought in the remainder of its $42.4 million sales, and during those three months the company bled $11.9 million.
Infinera is also running at a loss, but this is getting smaller and the company is steadily increasing both sales and market share. Over the last year this producer of InP chips that its uses internally to build systems for fiber optic networks has steadily grown its quarterly sales from $68.9 million in the quarter ending 27 June 2009, to $83.9 million, $90.2 million and most recently $95.8 million. Losses have come down in that period, falling from $27.1 million to $7 million per quarter. There is good reason to believe that this transformation will continue. Within the telecom market there has already been an increase in sales within the enterprise market, and the system vendors, such as Infineon, are now tipped for growth. If this happens the company could soon realize annual sales of $500 million and a return to profitability.
Future success demands investment in new technologies and products, and Infinera has certainly been doing this, with R&D expense chewing up over $100 million in last four quarters. This investment has led to the fabrication of 40 Gbit/s chips that have now been passed to the systems division, and a product that could undercut rival technologies operating at this speed could be out before the end of the year. Looking further ahead, the company is developing optical switching technology that could pay dividends in the 2011-2012 timeframe.
Changes at the helm may also spur a return to profitability. Former CEO Jagdeep Singh is a tech visionary and entrepreneur with great experience in getting a start-up off of the ground, but his successor, Tom Fallen, is probably better equipped for managing operations and driving up revenues.
If Fallon executes on these fronts, Infinera could shoot up the leader board over the next 12 months. As AXT has shown, it possible to go from propping up the table one year to occupying one of the top spots the next. Tune in next year to see how Infineon and AXT fare, alongside many other players in the III-V market.
Disclaimer. Richard Stevenson holds a small number of IQE shares.
Although everyone has been a winner over the last twelve months, some III-V firms have done far better than others. MOCVD equipment makers have bagged two of the top three slots thanks to strong orders from LED chipmakers looking to increase their capacity and ship more LEDs to producers of displays
June 2010
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