Tag Archives: cien

Acacia Communications Bolts, Giving Silent Tech IPO Market A Jolt

The tech IPO market remains in the doldrums, but it got a spark with Acacia Communications ( ACIA ), which turned in a strong debut on its first day of trading Friday. For its initial public offering, Acacia priced 4.5 million shares at $23 a share, the high end of its estimated range, raising $104 million. In afternoon trading in the stock market today , Acacia stock was above 31, up 35%, on volume of more than 3 million shares. The company makes chips that boost the speed and performance of optical communications networks used by cloud infrastructure operators and other content service providers. Its products include low-power digital signal processors that are application specific. It also makes silicon photonic chips that help facilitate data speeds of up to 400 gigabits per second, for use in data centers. It is also developing optical interconnect modules that will enable transmission speeds of 1,000 gbps and more. “We believe we are leading a disruption that is analogous to the computing industry’s integration of multiple functions into a microprocessor,” the company said in its IPO prospectus . The Maynard, Mass.-based company has grown rapidly. Revenue rose 64% in 2015, to $239 million. It reported 2015 net income of $40.5 million, up from $13.5 million in 2014. First-quarter revenue rose 78% to $47.2 million, with net income of $14.6 million. Acacia has about 25 customers, of which the top five account for about 83% of revenue. Its largest customers are ADVA Optical Networking North America, ZTE Kangxun Telecom, Coriant, and Alcatel-Lucent, it says in its IPO prospectus. Competitors include  Cisco Systems ( CSCO ), Broadcom ( AVGO ), Finisar ( FNSR ) and Ciena ( CIEN ).  

Microsoft, Amazon, Google Cloud Growth Lifts Fiber-Optics Firms

You might think the race to the cloud mostly benefits leading cloud services providers, such as  Microsoft ( MSFT ),  Amazon.com ( AMZN ) and  Alphabet ‘s ( GOOGL ) Google. Of all the electronics, communications and digitally inspired IBD industry groups, the Telecom-Fiber Optics industry group ranks the highest. It’s No. 6, up from No. 9 a month ago, No. 95 two months ago and No. 168 three months ago. What’s different from a few months ago? On March 9, Microsoft Azure Chief Technology Officer Mark Russinovich told the Open Compute Project summit that Microsoft will grow from 22 to 28 data centers in 2016. Azure is Microsoft’s cloud business. Also, Google announced March 22 that it would add 12 new data center regions globally by the end of 2017, including two in the U.S., nearly doubling its existing 14 regions. And cloud leader Amazon Web Services, a rising business of Amazon.com, will grow from 12 regional clouds to 17 “in the coming year,” CEO Jeff Bezos said April 6 in his annual letter to shareholders. Fiber-optic developers that create the high-speed lines and connections for data centers will be among those companies benefiting from this expansion. “The first two new data centers (Oregon and Tokyo) will come online later this year, with the others to be launched in 2017,” said Jefferies analyst George Notter, regarding the Google announcement, in a March research note. “Based on our conversations with industry contacts, we think the additional investments are great news for Infinera ( INFN ), Ciena ( CIEN ), and to a much lesser extent, Alcatel-Lucent.” He cited the three as Google’s vendors for wavelength division multiplexing (WDM, an optics technology) and Infinera’s Cloud Xpress as Google’s preferred metro data center interconnect (DCI) platform, “although we wouldn’t be surprised if they (Google) eventually operationalized other vendors as well.” Infinera Down After Analyst Calls Stock ‘Way Too Cheap’ At the time, March 24, Infinera was trading near 15 — “way too cheap,” Notter said. He reiterated Infinera’s buy rating with a 22.50 price target. Since then Infinera stock has fallen, after tumbling 2.7% Tuesday to 14.58, 42% off a nine-year high of 25.24 touched Aug. 18. But it was a tough day for the sector overall. Rival Ciena, however, fell 3% Tuesday, to 17.27, 33% off a 16-month high 25.77 touched July 23. Heading toward its first-quarter earnings release April 27 after the market close, Infinera is expected to report continuing choppy earnings growth on slower sales growth. Analysts polled by Thomson Reuters expect earnings up 6% to 17 cents per share minus items, on sales up 31% to $246 million. While earnings are expected to top the year-earlier 16 cents per share, it’s a tough comparison to the Q1 2015’s 433% EPS growth. With a market cap of $2.06 billion, Infinera is the second-largest company in the IBD fiber group, following Ciena’s $2.4 billion, but neither is among the healthiest. Ciena carries an IBD Composite Rating of 72, and Infinera has a 67. The healthiest, both with CRs of 97, are Lumentum Holdings ( LITE ) with $1.45 billion in market value, and little Clearfield ( CLFD ), with a $222 million market cap. The third- and fourth-largest among these small caps both carry 87 CRs: Finisar ( FNSR ) with $1.8 billion in market value, and Viavi Solutions ( VIAV ) with a $1.5 billion market cap. Finisar fell 2.9% Tuesday, and Viavi slipped 1.1%. Image provded by Shutterstock .

Ciena Gets Buy Rating Affirmation After Alliance Gets A Buyer

Competing in the shadow of Cisco Systems ( CSCO ) can be a tough place for Ciena ( CIEN ), the specialty fiber optics developer for telecom and cable service providers: Perform inadequately and you’re dust. Perform well and get picked off. In fact, perform so-so and get picked off, like Alliance Fiber Optic Products ( AFOP ) getting bought out by Corning ( GLW ) in a $305 million deal disclosed Thursday. “Ciena is quick to recognize its financial performance has fallen short of investor hopes, and its own,” said Nomura analyst Jeffrey Kvaal in a research note Friday, after spending time with Ciena Chief Technology Officer Steve Alexander and investor relations executive Gregg Lampf. Ciena is “taking steps to improve financial performance,” Kvaal said. “Ciena has suffered from high investor expectations ( Verizon ( VZ ) metro timing), macro factors (foreign exchange, mergers), and its own execution. To address these issues, Ciena has cleaned up its execution, widened the guidance range and added conservatism to its European guidance. “We would have preferred the guidance conservatism to apply more broadly. We believe many investors will only consider the stock following several quarters of outperformance, despite Ciena’s steady annual progress.” With such ambivalence, Kvaal reaffirmed Nomura’s buy rating and 24 price target on Ciena stock, which was up 2.5%, above 18, in afternoon trading in the stock market today . That’s still 32% below a nearly 16-month high of 26.50 touched last July. Shares fell below their 50-day moving average this week. Alliance Fiber Optic stock was up 19% Friday afternoon, at a six-month high near 18.50. That’s the price Corning agreed to pay for Alliance, an agreement  disclosed after Thursday’s market close. Corning was down a fraction Friday afternoon, near 20.50, near a nine-month high at 21.07 reached March 30. Shares of networking king Cisco were up a fraction, near 28. Alliance and Corning both earn middling 63 IBD Composite Ratings, while Ciena has an 81 CR. Composite Ratings rank companies by major metrics such as sales and earnings growth over the past 12 months. “Beneath the headlines,” Nomura’s Kvaal said, Ciena offers “a solid growth story with rising margins.” Kvaal notes that Ciena works in the crosstown and long-haul markets beyond 50 miles, not inside the data center or campus markets. “It thus does not see the intra-data-center strength the component vendors are seeing and is not affected by Microsoft ’s ( MFST ) Colorz launch (announced in March). ” For Ciena’s fiscal Q1, ended Jan. 31, the company earned 18 cents per share minus items, up 50% from the year-earlier quarter, beating analysts’ 14-cent estimate. Revenue rose 8% to $573 million but missed analysts’ $576 million expectation. For Q2, analysts polled by Thomson Reuters expect EPS ex items to fall 23% to 27 cents, on revenue up 1.5% to $631 million.