On Monday, I took optical-networking specialist Infinera (Nasdaq: INFN) to task for bloated inventories and cash-burning habits. The stock was jumping sky-high on the news that Chief Marketing Officer David Welch was buying Infinera stock on the open market, but I just couldn't get excited about that with so many things going wrong for the company.
However, readers took me to task for ignoring another Infinera announcement that day. Together with pan-African telecom SEACOM, Infinera demonstrated the fastest long-distance data link Africa has ever seen. At 500 gbps across a thousand-mile stretch of South Africa, the field trial is just a teaser, leading up to an African optical infrastructure that's 10 times faster.
I'm impressed by this achievement and the ambitious plans that lie ahead for Infinera, but exactly how groundbreaking is a 500-gigabit link in this day and age? Consider that Arris Group (Nasdaq: ARRS) recently showed a 4.5-gigabit connection to a single destination through traditional coaxial-cable broadcast networks. While on a different scale, there's plenty of innovation across the varying links of delivering broadband to consumers.
All that said, every journey starts with a single step, and Infinera seems intent on capturing business in the African market -- and maybe other cost-sensitive, underdeveloped markets as well. The next BRIC bloc could very well involve current backwaters like South Africa, Chile, or Indonesia. Infinera would be smart to establish business relationships in such markets before their growth explosion starts.
How low will that fruit hang? Today, Cisco Systems (Nasdaq: CSCO) collects 11.6% of its sales from "emerging markets," while Juniper Networks (Nasdaq: JNPR) grabs 29% of revenue from the popular (but not quite emerging-market equivalent) EMEA market. Alcatel-Lucent (NYSE: ALU) posts 13.5% of sales in the "rest of world" category.
Infinera's EMEA sales add up to 21% of revenues, a bit below Juniper's engagement in the same market, and generally in line with other rivals. If Infinera truly wants to get a jump on Africa and other distant-future growth markets, I don't see a wholehearted commitment so far.
But maybe that comes later. To find out, you need to keep a close eye on the networking sector, and Infinera in particular. Our Foolish watchlist feature will help:
- Add Infinera to My Watchlist.
- Add Juniper Networks to My Watchlist.
- Add Cisco Systems to My Watchlist.
- Add Arris Group to My Watchlist.
- Add Alcatel-Lucent to My Watchlist.
