Infinera weans itself from Level 3

Infinera grew less dependent on its largest customer, Level 3 Communications, in the third quarter, thanks to a growing roster of other customers, including Cox Communications, XO Communications and 360Networks.

The optical equipment vendor’s revenue was up nearly 7% sequentially to $62.2 million in the third quarter. Three companies each contributed at least 10% of that revenue. Level 3, which contributed 48% of Infinera’s second-quarter revenue on an invoiced shipment basis, contributed just 28% in the third quarter. (On an invoiced shipment basis, total revenue was $80.4 million—nearly double the year-ago number.) In the fourth quarter, Infinera expects Level 3’s contribution to be even smaller than it was in the third.

“We’ve planned on that for quite some time,” said Duston Williams, the company’s chief financial officer.

Level 3 also holds about $50 million in Infinera stock.

Infinera added seven new customers in the quarter for a total of 38—more than double the year-ago number.

Invoiced shipments to overseas customers increased from 16% in the second quarter to 19% in the third.

However, Williams cautioned that some conditions benefiting the company in the quarter are “not necessarily repeatable in the short term.”

Infinera predicted revenue based on invoiced shipments will increase 3% to 6% sequentially in the fourth quarter to between $83 million and $85 million. However, because some one-time effects boosted the company’s net income to nearly $11 million in the third quarter, the company expects its fourth-quarter net income to fall between $2 million and $3.5 million, as it did in the second quarter. Those one-time effects included lower than expected warranty provisions.