lt cap,

I hope you're right about the INFN CC being a bit of a bummer, and the NFLX announcement was meant to distract and soften the blow. My perception is colored by the fact that I indeed sold Nov 10 stk $8.50 calls on almost all my remaining shares for $ .40, with an effective break even price of $8.90. But I have the feeling that the CC may be a good deal better than you fear, at the very least in terms of giving sound forward guidance, which most always seems to trump everything else, if it's credible. But I always seem to be paying attention at the wrong time - on NOK, if I had been paying attention, I would've sold a bunch going into earnings. If I had not started paying attention to INFN's options until today, I could've sold those calls for .60, rather than .40. 

But I'm hoping you're right - the CC will have some sour medicine in it that would temper a further rise in the stock. If it'll just finish below $8.50 on the 10th, I can rinse and repeat, which is a joy to participate in. Just ask Jon. But the hallmark of the sector is, of course, outsized moves. So I wouldn't be surprised to see it zoom. Fallon could use Netflix+Centurylink+better than the -.23 earnings consensus to launch the damn thing into orbit. We'll see.

Intel is in a rare mild retreat today. Apparently, Broadcom's wooing of Qualcomm is seen as making competition for INTC's 'intelligent automobile' venture. If the ploy falls apart, INTC might get a 'relief kick' higher. Why has this market felt 'toppy' for .....years now? My intelligent doom-sayer friend says that when the 'fall' comes, it's going to be mega-ugly. So thought we all. For years.

As Jester must know, TTWO had a terrific quarter, gave terrific guidance, is having a stock price explosion, and pulling ATVI +4% and ERTS +2% along with it. I must be missing something besides Dead Red Redemption 2 in their lineup. 

"As Jester must know, TTWO had a terrific quarter, gave terrific guidance, is having a stock price explosion, and pulling ATVI +4% and ERTS +2% along with it. I must be missing something besides Dead Red Redemption 2 in their lineup. "

I haven't traded TTWO in forever, but you can't deny the strength of GTAV being in the monthly top 10 sales for 42/50 months in the US, still holding over $30 typically, whereas I've seen games released about 6 months ago such as MEA as cheap as $12. The appeal for RDR2 isn't just the sales, it's the online model which I'm certain will be similar to GTAV's. That means huge high margin MTX money for years.

Jester,

Yeah, it had slipped my mind that GTA V is still a 'money machine' after all these years. And I figured RDR 2 to be a 'niche' product - since RDR 1 was (aside from Activision's abysmal 'Gun') the only decent Old West VG out there. (I don't think I ever played it.) But, using my imagination (I've not read stories about it, as the venue doesn't interest me), I'd bet that if it's posing as GTA VI (GTA V in the Old West), the thrill of beating people in the balls with a baseball bat will be kindled anew, sucking VG $ down a black hole, and then there'll be DLC...DLC....DLC....

Genius.

It's a bit funny how ERTS fell several weeks ago on less than great guidance, but all sins were somewhat forgiven today. I guess just basking in TTWO's glory creates wealth.

I just started reading the CC transcript.  As it turns out the company delivered a decent quarter relative to very low expectations, however next year will be a tough year again.  This paregraph from the CC tells the tale:

"Third, there are signals customer CapEx could be weaker than we had originally anticipated in 2018. This expectation is supported by multiple industry analysts lowering their 2018 outlooks for the DWDM market outside of China, now expecting overall growth in the low to mid-single digits, with long haul expected to be only flat to slightly up. I believe the growing trend towards disaggregation is a key contributing factor to this outlook, as customers increasingly transition to disaggregated architectures."

The guidance is soft for next quarter and it mentions Century Link delay in closing will continue to have a negative effect:

"Now turning to our outlook for the fourth quarter of 2017, we currently project revenue of $190 million, plus or minus $5 million. The midpoint of this range is slightly down on a sequential basis and up 5% on a year-over-year basis. This expectation reflects our anticipation of a continued ramp in the CX2 and XT Series, offset by a further decline at the new CenturyLink due to the delay in the transaction closing and softness at certain ICP customers. In Q4, we also anticipate the initial revenue contributions from our recently launched XTM II 16QAM metro edge platform, although we expect more substantial contributions over the course of FY 2018 as key existing customers adopt the platform. As it is always difficult to predict weather and to what extent we could benefit from year-end budget flush, we have not made much upside into our guidance."

I will post my own thoughts tomorrow, I need to let this brew in my head.  This stood out as well:

"The restructuring has nothing to do with the receptivity of ICE4. It has to do with, quite frankly, as we laid out, we are still uncertain of when the top line from a CenturyLink/Level 3 will fix itself. It has exceeded all of my expectations for how long that could go on and how challenging it has been."

One quick note:  The restructuring comes as INFN is finishing up its portfolio release, so it makes sense and should not impact development of products.  The restructuring involves closure of a remote R&D facility, not in head quarters where the most sensitive R&D is done.

lt cap,

Thanks for all the essential parts of the CC. I'll look forward to how it strikes you when you've collected your thoughts. 

I had thought that if things went really badly, we might see the $6's. And, well, here we are. 

The pattern seems monotonously familiar - lower guidance, suggest 2018 won't help (even if it's couched in 'softer terms' - lack of visibility, which leaves open the possibility that things might be better than expected in 18) - but the street won't buy it - a quick bullet to the head seems to be the common response. I did see some analysts lower PTs, but also saw that the average PT is $11 - which seems way too optimistic perhaps. More analysts yet to weigh in.

And I'm grateful that you shared your clear-eyed vision here, as it led me to half my NOK and INFN positions, which just seems wise at this point. I had hoped that CIEN might do a surprise CC, which happened several quarters ago, but now I expect them to follow the same 'capex drought, unclear guidance' pattern. Maybe there will be an options play closer to when they report in early December.  ATT said today that it saw itself spending $1 bln on capex if Trump's corporate tax cut was enacted. But I think that's just BS to try to get the SEC to soften up on what it would require to approve a Time Warner deal. So it goes.

One thing that causes me concern is this: Given that, if I've got it right, any significant capex shift won't happen until at least 2019, what are the chances between now and then that we won't see at least a sharp correction, and more likely a recession between now and then? And in those circumstances, the weak seem to get beaten the most. Or maybe the Fed can keep all the plates spinning, given the mixed signals of the recovery.

lt cap,

I've not read the news since I saw the INFN earnings blurb just past the close, and I've been out all day, so I'm speaking from ignorance. Which is usually a stupid thing to do. But I'll read the earnings summaries and feel like a fool afterwards.

But when I left, INFN was crossing AH trades in the mid $8.80's. I see the last trade was....$8.25, it seems. Which may mean that what you predicted was spot-on - that the Netflix win early announcement was meant to lessen the impact of some of the other news. If I recollect the blurb right - beat on earnings (I thought -.23 was consensus, and actual was -.25 - probably looking at wrong numbers.), light on revs. Plus....the announced 'restructuring'.  Sometimes restructuring is a wise business decision and makes sense. In my experience, it  can sometime mean either 1. We screwed up and need to rearrange the deck chairs on the Titanic; and/or 2. We thought we had a clear vision of the future, but it turned out our eyesight was worse than 3 blind mice. So we're going to shake things up and do a 'do-over', which will make money spent on 'losses' look like it went into a shiny new coat of paint. (And the 3 of us officers are going to stand in the corner until we've learned our lesson. But when nobody's watching.)

I'm probably wrong. Not the first time. But if it does hang around the $8.25 level, selling the $8.50 calls for .40 will look smart. For at least 15 minutes, anyway.

I'd hope the Netflix news means that some part of Netflix's transmission network will be 'hardwired' with INFN's equipment, providing a stream of hardware and maintenance revenue for a long time to come. I'm sure the analysts will weigh in on that one.