Even though it was coupled with the announcement of a major new deal, investors read between the lines of Infinera's
While Infinera expects to meet its current-quarter guidance, the optical networking company expects to grow revenues at only 10% this year, as opposed to the 25% growth it envisioned before.
Blame for the shortfall was laid on the timing of customer network build-outs in the U.S., and extended sales cycles with new customer wins. Apparently, customers such as Level 3 Communications
The new deal with German giant Deutsche Telekom
Taken together, the news was enough for investors to cut Infinera's stock by nearly 30% today, leaving confidence in the equipment supplier shaken. But assuming that management is not using smoke and mirrors to cover a fundamentally deteriorating position against other suppliers, such as Alcatel-Lucent
Infinera holds technical and cost advantages over many alternatives, giving it a good moat and solid standing against much larger competitors. It takes a lot to destroy a business with this kind of leverage. And with the Chinese Ministry of Industry and Information recently approving Infinera's solution, the company has the gate opened now to play in the new telecom world in China.
Certainly, investors had a door slammed on them this morning, but this Fool sees a window of opportunity opening.