Ciena backlog spurs trader hopes

2012-12-27 15:54:12

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Avago unveils Vortex 100G gearbox Ethernet/OTN PHYs
Avago Technologies (NASDAQ: AVGO) has introduced its new Vortex Gearbox family of physical layer transceiver (PHY) devices supporting Ethernet and Optical Transport Networking (OTN). The company claims that the first member of the new product range, the Vortex Gearbox AVSP-1104, is the industry’s longest-reach 10:4 gearbox IC, withstanding up to 32 dB of channel loss.The devices feature Avago’s 28-nm CMOS SerDes technology that has demonstrated compliance with IEEE CAUI and various Common Electrical Interface (CEI) standards, including CEI-11G-SR, CEI-25G-LR, and CEI-28G-VSR. The Vortex Gearbox devices also incorporate Avago’s proprietary decision feedback equalization (DFE) architecture, providing low overall power consumption, low data latency, and best-in-class jitter and crosstalk performance, Avago asserts."With over 250 million SerDes channels shipped over the past decade, Avago has established a record of developing leading-edge embedded SerDes cores for high-performance ASICs," said Frank Ostojic, vice president and general manager of Avago’s ASIC products division. "Building on this foundation, we now offer the AVSP-1104, the first product in the Vortex Gearbox family. We are delivering 100GbE solutions now and will enable designers to create systems incorporating serial communication at rates greater than 28-Gbps in the near future.”The Vortex Gearbox AVSP-1104 is a single-chip PHY IC designed for high-density 100G Ethernet and OTN applications. The device is ideal for driving both backplane and portside applications, according to Avago. Key features include:Long-reach performance withstanding up to 32 dB of channel loss  hole-free operation from 1 to 28 Gbps   gearbox functionality for full-duplex conversion of four lanes (4x25 Gbps, 4x28 Gbps) to 10 lanes (10x10 Gbps, 10x11 Gbps)   option for configuration as a retimer function for full-duplex transmission of 10 lanes   programmable Tx/Rx equalization of all SerDes interfaces  bit-error rate (BER) of 1e-20  easy-to-use diagnostic software for remote debugging.“On the basis of its proven SerDes technology and broad portfolio of ASICs, ASSPs, IP and optics, Avago enters the PHY ASSP market with instant credibility,” said Jag Bolaria, senior analyst at The Linley Group. “The features included in this first member of Avago’s new Vortex Gearbox family of customer channel products meet or exceed the requirements in both backplane and portside applications.”Samples of the AVSP-1104 are available now in 320-pin fcBGA package.
Ciena backlog spurs trader hopes
Despite missing on earnings per share in its fiscal fourth quarter and entering what management describes as “a quarter in which we typically experience seasonal reductions in order volume and customer deployment activity,” shares in Ciena Corp. (NASDAQ: CIEN) rose on Wall Street yesterday. Analysts speculated that the growth in order backlog may have led investors to conclude that Ciena is in good shape for a hoped-for future turnaround in fiber-optic network equipment spending.Ciena reported December 13 results for its fiscal fourth quarter, which ended October 31. Revenues of $465.5 million represented a 1.8% sequential decline but a 2.2% improvement over the year-ago quarter. For the recently concluded fiscal year, Ciena reported $1.8 billion in revenue, up from $1.7 billion for fiscal 2011.GAAP net loss for the recently concluded quarter was $38.8 million ($0.39 per common share), worse than the GAAP net loss of $22.3 million ($0.23 per common share) suffered in the year-ago fourth quarter. For the fiscal year 2012, Ciena reported a GAAP net loss of $144.0 million ($1.45 per common share) versus a GAAP net loss of $195.5 million ($2.04 per common share) for fiscal year 2011.“With five percent annual revenue growth and fourth quarter financial performance in line with our expectations, we continued to significantly outpace the market and take share in 2012 despite the challenging environment. That momentum resulted in record order flow and year-end backlog,” said Gary Smith, president and CEO of Ciena, via a press release. “Customers require more network convergence with greater programmability to deliver more services, and we believe our portfolio is leading the transformation to next-generation intelligent networks.”Investors appeared to buy the story, despite the fact that Ciena guided revenues for the first quarter of fiscal 2013 at $435 to $460 million, with adjusted (non-GAAP) gross margin percentage in the low 40s and non-GAAP operating expense in the high $180s million range. Shares of the company’s stock closed yesterday at $15.80, up from the previous day’s $15.57 on a volume of 15,671,698.Investor enthusiasm for the stock left several analysts puzzled. “A record $2 billion of orders in FY12 and 25% backlog increase to $900 million along with hope regarding a capital spending cycle seems to have fueled investor optimism,” wrote Raymond James analyst Simon Leopold in a note to investors by way of example. “We note that FY11 ended on a similarly upbeat note with backlog rising ~20%, yet FY12 fell short of expectations.“The intraday rise in Ciena's shares surprises us and appears as a hope trade (i.e., belief that it generates significant growth and margin improvement eventually),” continued Leopold, who has Ciena’s stock rated as “Market Perform.” “Ciena's return to profitability and achievement of its long term 10% to 12% operating margin target slide out in time again. We remain optimistic regarding demand, but we're surprised and disappointed by the higher expense and lower margin outlook.”Weakness in both packet-optical transport and packet-optical switching led to the sequential revenue decline in the fiscal fourth quarter. Packet-optical transport sales shrank $9.1 million sequentially, while packet-optical switching revenue retreated by $17.3 million.
Dark fiber provider Litecast latest Zayo acquisition
Zayo Group LLC will whip out the check book once again, this time to buy Litecast/Balticore, LLC. The Baltimore-based provider of dark fiber and other fiber-optic network services will cost Zayo $22 million in cash on hand.Litecast owns and operates a metro-Baltimore fiber network that includes more than 110 buildings on-net, including the city's major data centers and carrier hotels. Litecast provides both dark fiber and Ethernet-based services to business and government customers.Zayo already has infrastructure in the Baltimore/Washington, DC area, thanks to its previous acquisitions of AboveNet and FiberGate (see "Zayo Group to acquire AboveNet" and "FiberGate to be Zayo's latest acquisition"). The agreement to acquire Litecast therefore will extend its current footprint."Given its geography and product offering, Litecast is a natural extension of Zayo's recent acquisition of FiberGate," explains Dan Caruso, president and CEO of Zayo Group. "The acquisition completes a very compelling set of fiber assets in the increasingly important Baltimore/Washington metropolitan market."Zayo expects the transaction, which is subject to the usual approvals, to close by the end of this month. Given Litecast's concentrated network geography, product set, and size, Zayo also anticipates a speedy network and operations integration process.
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