Infinera Corporation (INFN)

September 15, 2011 1:00 pm ET

Executives

Randy Nicklas - Chief Technology Officer

Matthew Finnie - Chief Technology Officer

Thomas Fallon - Chief Executive Officer, President and Director

Unknown Executive -

Stuart Elby -

David F. Welch - Co-Founder, Chief Marketing & Strategy Officer, Executive Vice President and Director

Analysts

Unknown Analyst -

Presentation

Operator

Ladies and gentlemen, please welcome, CEO, Tom Fallon.

Thomas Fallon

Good morning. I'd like to welcome all of you to Infinera. I appreciate both the live audience and the audience online. It's a very exciting day today for us as we kind of unveil where Infinera has been working to take the networks. Before I get into my presentation, I need to discuss with you safe harbor, which basically says the presentation I'm about to give has forward-looking commentary that reflects what we think will happen in the future versus what will happen in the future and therefore, contains inherent risk.

In the early 1900s, Ernest Shackleton decided to take on what he considered to be the last great Antarctic adventure. He crossed the continent, sea to sea, over the polar journey. To find his crew, he placed a unconventional ad in the London Times, "Men wanted for hazardous journey, low pay, bitter cold, endless hours of darkness. Safe return? Doubtful. Honor and recognition if successful." He fielded 5,000 applicants, and he and his crew set sail on the Endurance. Partly through the journey, the Endurance got trapped in ice, and captain and crew were forced to abandon ship and faced an arduous and dangerous journey back home, where they all made it safely. Today, Shackleton is considered a hero. The journey in the pursuit of photonic integration is a bit like Shackleton's adventure. First written about at AT&T Bell Labs in 1969, the promise of the PIC was unfulfilled and almost unpursued for several decades. By 2000, conventionalism was that PICs would not be commercially viable. In 2001, Infinera went in search for its own great adventurers, offering low pay and the opportunity for honor and recognition when successful. When we introduced the DTN in 2004, the question of PIC commercial viability was put to bed. And today, I am delighted to unveil to you our next leap forward in networking from Infinera, our next generation of photonic integrated circuits and the next milestone in Infinera's journey to transform the telecom infrastructure.

The DTN-X, based on our third-generation, 500 Gig PIC. It is a next-generation multi-terabit switching platform that offers really 3 products in one. It is a DWDM transmission system, offering 500 Gig super-channels based upon 100 Gig coherent channels. It's an OTN switch that scales from 5-terabit non-blocking at ODU 0 today, to 100-terabit non-blocking in the future. It is a platform that can be upgraded to MPLS in the future, allowing our customers to deploy today and have a migration path to packet in the future.

Today we're going to talk about a lot about the DTN-X, but we're also going to talk about the fundamental technologies that enable the DTN-X. Because we believe unless you design this type of integrated platform from the electron and the photon up, you cannot do it without compromise. And while the industry is starting to recognize the value or even the necessity of having integration of DWDM and switching, only Infinera with its core technologies provides the ability to create a platform that achieves the scalability, simplicity and efficiency required by today's networks.

In the next 45 minutes, with the help of some of our industry experts, Stu and Randy, I'm going to walk through a little bit of the history of the DTN and some of the success it's created. I'm going to highlight some of the network changes that have happened since the DTN was deployed in 2004. I'm going to close with why we view the DTN-X as being uniquely positioned to satisfy these new requirements.

In 2004, we introduced the DTN with 2 fundamental innovations. First, we introduced the first 100 Gig PIC, offering brand-new economics. And we also integrated for the first time integrated switching, allowing customers to extract maximum value from the network resources. Our customers loved it. It was 100 Gig slots. And today, we have over 85 customers in 50 countries who have deployed over 8,000 chassis. They loved it because they took the complexity and the art of analog engineering out of the field, and they replaced it with a digital optical experience. That's important because they were now able to achieve scalability, simplicity and efficiency. They could roll out services faster than anyone else and grow market share. And they could do that with less CapEx and less OpEx, allowing them to maximize their profitability.

Based on the success of the DTN, we have continued to invest in that platform. And today I'm also delighted to announce our next release of the DTN. It's more scalable, it's simpler and it's more efficient. First, we're announcing our 40 Gig coherent line card that enables our customers to take fiber capacity up to 6.4 terabits, twice that of most of our competitors. It's simple. Our customers can deploy a 10 Gig line card or a 40 Gig line card in the same chassis, on the same fiber, at the same time. And we're also introducing 2 new service modules: A 40 GigE service module and 100 GigE module, allowing our customers to more efficiently interconnect with routers and carry those services over either 10 Gig waves or 40 Gig waves, whatever makes the most economic sense.

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