To demonstrate the dramatic transformation in the corporate management of Infinera, particularly with its metro business, a fuller summary of fibeReality’s articles is in order, after our post recently referring to a 2015 article “on humility.” From that time, our pieces demonstrated the past problems involving execution at the supplier. Towards the end of 2017, several months after the arrival of an outsider, David Heard, initially taking on the role of SVP and GM of Products and Solutions, there was the first indication of movement in a positive direction. By the end of 2019, fibeReality became convinced that there was a permanent change for the better, and around a year later, we even saw the possibility for an exit. Hopefully, the details provided in this chronological overview may be useful to the financial crowd, many of whom are apparently having difficulty in making distinctions with the previous leadership, as mentioned during Investor Day this past March. The difference is like night and day.
fibeReality’s ten posts from 2016 to 2017, stressed that the past management at Infinera struggled because of inadequate adaptations to commercial realities, along with a rigid marriage to homegrown technology:
- January 2016 — Infinera’s PIC Challenge: On the problem with the vendor’s original business plan. “…Going it alone with its PICs…, [as] a disruptive cost factor, initially only resulted in the total interexchange business being cut by as much as a third because of the lack of growth in the space, combined with the other competitors having to match the lower prices to remain competitive.”
- May 2016 — Infinera’s Last Ditch: Infinity and Beyond: On the firm at that point, “indirectly conceding that there is no potential of getting business from either Verizon or AT&T.”
- August 2016 — Infinera’s Lumentum Band-Aid: “It is hard to imagine how this partnership helps the system vendor very much in that by necessitating a separate box, the density issue is tremendously magnified.”
- October 2016 — Infinera’s Biggest Concern is Ciena: “When your performance is underwhelming, is it appropriate to be laughing, and to be cracking unfunny jokes about investment analysts buying your devices?”
- November 2016 — Top 10 Enigmas at Infinera’s Analyst Day: “Overtaking Ciena, Nokia Alcatel-Lucent, and Huawei does not seem logical.”
- March 2017 — Infinera and the Age of Narcissism: “One of the most disrespectful comments toward the ‘Transmode’ contingent was made after it had become very noticeable that the TM Series helped to bail out Infinera in the last quarterly results.”
- May 2017 — Infinera Apparently Won’t Neutralize XTM: “That is a far cry from his emphatic comment of integration of the PIC technology onto the TM-Series platform a little over a year ago.”
- June 2017 — Infinera’s Crack at Quasi-Reconstruction: “The rather isolated introduction of the XTM II is a new attempt by Infinera to straddle the line….”
- August 2017 — Infinera: No Way Out?: “Our own view is that we find it unlikely that any other vendor would be interested in purchasing a company which has a fairly bleak future.”
- November 2017 — Infinera: Actions Speak Louder Than Words: “There was definitely some foreshadowing of this executive shakeup on the part of Infinera’s CEO on the preceding quarterly conference when he evidently finally saw the light and stated, ‘Make no mistake, I have under-executed on our metro strategy based on the TM.’”
In early 2018, fibeReality was inclined to give David Heard the benefit of the doubt when he was still in charge of Product Realization as an SVP and GM. We stated in “Infinera: Doubling Down on Lost Cause, “we would not be surprised if [he]…had advocated a plan, which substantially would have taken the company away from what we would characterize as throwing an assortment of solutions against the wall, and seeing which ones will stick….”
During July, 2018, fibeReality wrote in “Infinera/Coriant: A Survival Gimmick: “It may be a positive sign that David…is definitely front and center this time in promoting this deal…, and that hopefully the company will finally stop playing favorites with just the gear developed in-house.” While we acknowledged the “challenge in supporting overlapping products,” with such an acquisition, we also mentioned that the supplier’s chance for survival was bolstered, and that “Infinera is no longer in the embarrassing position of being absent as an active supplier to the two largest incumbent ISPs in its home market.” (Later that year, we discussed the potentially hard choices for users with Infinera’s broader base of gear in “Infinera/Coriant: On Capping Installed Base.”)
In 2019, fibeReality published, “Infinera: Plausibility for Cautious Optimism” in which we were very impressed by an addition to the board, and started to wonder about a change at the CEO position. The following July, in “Infinera’s “Tellabsation”: Back to the Future,” we noted the start of a healthy move away from the obsession with PICs as part of a new narrative. There was only a minor push back in the opposite direction as explained in October 2019, with “Infinera’s XR Optics: “Fat & Happy” Front.”
Then in November of 2019, fibeReality was convinced of a permanent, favorable change in the culture of the supplier as expressed in “Infinera: An Unanticipated Destination Point.” Towards the end of 2020, we put out “Infinera: Potential for Exit by Chip Firm Buyout,” in which we anticipated the shift toward a more chip-centric approach.
Within the next two years to the present, Infinera prioritized properly, such as in bolstering its position in the metro space. The vendor also concentrated on developing new differentiated offerings, especially with its TROSAs. While apparently still dealing with some internal conflict (as addressed in the first link of this article), Infinera’s leaders have done an admiral job in maximizing its chances for a successful exit in the future.
(As always, fibeReality does not recommend any type of security — and we do not invest in any stocks with companies that are covered by us.)
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