Infinera Corp. (NASDAQ:INFN)

Babachrono (76.89) Submitted: 4/27/2009 4:22:08 AM : Start Price: $8.45 INFN Score: -58.82

12% insider ownership and 46% insititutional. Large amounts of insider buying in Feb and Mar of this year. Large amounts of cash on hand and no LT debt. Declining EPS over the last 4 quarters, and expected to further decline and go negative for the next 4. Taking top accounts from their competitors at a good pace shows they are a company to be reckoned with in the industry. Their advanced products that are steps ahead of their competitors and hopefully can keep that huge advantage over them.

A key point of their company is to realize that they take a profit hit when they add a new customer, the large amount of common equipment to go into a new customer is at a very low margin, plus discounts lower it even further. However, as the company expands, all they have to do is plug in modules, and these modules are at a very high margin. The new common equpiment is developed being easy to add on to, just plug a module into the open slot and push the power button. So with all the new customers, EPS will drop, but as they begin expanding and adding the modules, EPS will climb with the higher margins. Short-term this company will take a hit, buy in here, if it falls back up the truck, over the long term this company has a genuis business model and is only going up.