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What: Shares of digital optical networking company Infinera (NAS: INFN) slumped as much as 10% after the company reported disappointing first-quarter results.
So what: For the quarter, Infinera recorded a loss of $0.10 (excluding one-time items) on a 13% rise in revenue to $104.7 million. Although the loss was $0.02 smaller than Wall Street had expected, revenue came in $1.1 million lighter than the consensus. Non-GAAP gross margins also dipped during the quarter to 40% from 48% in the year-ago period.
Now what: What's really disconcerting about today's report is how little was said regarding the drop in margins outside of CEO Tom Fallon's comment: "Activity in our first quarter reflected demand from our customers for both our existing and next generation platforms." That doesn't help much and it's definitely not giving investors any confidence in the stock. As losses continue to mount, I'd suggest avoiding Infinera altogether.
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At the time this article was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of Infinera. Motley Fool newsletter services have recommended buying shares of Infinera. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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