Is Calix Networks (CALX) back? Skeptics who have burned before might have reason for caution, but the company's earnings beat gives the optimists a reason to look forward to an expansion in 1 Gigabit broadband deployments.

New service provider investment in Calix's access equipment was evident in the company's earnings report. In reporting its second quarter 2014 results last night, Calix reported sales of $98.0 million, up 4% above the same period last year and above consensus analyst estimates of about $95 million. The reported earnings per share (EPS) of $0.10 was better than consensus estimates of $0.01. Shares popped about 11%, rising to nearly $10 in morning trading. 

As we've reported here, interest in deploying gigabit Ethernet as a premium service for high-tech business is growing among service providers, and there has been a noticeable uptick in deployments. The trend is also supported by government stimulus policies. 

"The sales upside came as a pleasant surprise and included improved spending from tier 2 & 3 operators, recognition of deferred revenue from stimulus projects, and perhaps increased share from top customer CenturyLink," wrote Raymond James Managing Director and analyst Simon Leopold in a research note this morning. "We envision Calix's business as stabilizing with the improved tier 2 & 3 spending, but visibility remains a challenge; at least y/y comparisons for 4Q and 1Q appear fairly easy."

This entry was posted on Wednesday, July 30, 2014 at 16:42 pm and is filed under Infrastructure & SDN, Investing.
Keywords: Calix, Gigabit Broadband, Gigabit Fiber, Carl Russo.

Facebook Founder and CEO Mark Zuckerberg gets to have all the fun. Not only does he own a Hungarian sheepdog, but his net worth has hit $32 billion as Facebook shares hit new highs with the company firing on all cylinders.

The stock rallied 7% this morning, hitting a new all-time high of $76 per share. [Disclosure: the author was smart enough to buy Facebook shares at $18 but then dumb enough to sell them last year in the $30s. Oops.] 

Facebook reported a record second quarter with revenue of $2.91 billion, an increase of 61% over the same quarter of last year. The company booked $791 million in net profit and is now at a annual run rate of $3 billion in net profits. The social networking company's fortunes were boosted by gains in mobile advertising, much of it attributed to growth in Instagram. Mobile advertising revenue represented approximately 62% of advertising revenue for the second quarter of 2014, up from approximately 41% of ad revenue in the second quarter of 2013.

This entry was posted on Thursday, July 24, 2014 at 17:25 pm and is filed under Mobile, Digital Media, Investing.
Keywords: Facebook, Instagram, Earnings, Advertising, Marketing

Apple shares enjoyed modest gains this morning after a solid earnings report yielding $10.3 billion in cash flow for the quarter. The stock rose $1.50 (1.5%) to $96.22 in early morning trading. 

For the fiscal third quarter ending June 28, 2014, Apple posted revenue of $37.4 billion and quarterly net profit of $7.7 billion, or $1.28 per diluted share. That compared to revenue of $35.3 billion and net profit of $6.9 billion, or $1.07 per diluted share, in the year-ago quarter. More importantly, the company's margins are back on the rise: Gross margins climbed to 39.4 percent compared to 36.9 percent in the year-ago quarter. 

Apple CEO Tim Cook said that iPhone and Mac sales fueled the growth and resulted in the strongest profit growth in seven quarters. The company returned $8 billion in cash to shareholders through dividends and share repurchases during the June quarter.

This entry was posted on Wednesday, July 23, 2014 at 14:05 pm and is filed under Mobile, Investing.
Keywords: Apple, Tim Cook, iPhone, Earnings, Carl Icahn

Verizon's solid earnings results and robust capital spending (capex) bode well for continued spending among wireless technology providers, although some analysts expect spending to remain flatten out in the second half of the year. 

The service provider on Tuesday reported better-than-expected revenue on Tuesday with a jump in wireless customers and a surge in tablet sales. The company reported growth of 53 percent in net wireless customers, to 1.4 million, for the second quarter, and a record 1.15 million in tablet sales. 

Verizon's capex for the second quarter totaled $4.3 billion, above consensus analyst forecasts of $4.1 billion. That's an increase of 5% from the prior quarter and 8% year-over-year. 

This entry was posted on Wednesday, July 23, 2014 at 13:41 pm and is filed under Mobile, Infrastructure & SDN.
Keywords: Verizon, Earnings, Capex

Communications equipment suppliers are ready to report on the second quarter. Earnings in the next few quarters will be interesting to watch with major shifts occurring in telecom spending, including fear over AT&T's recent spending slowdown and questions about the impact of Software Defined Networking (SDN).

Despite optimism among some analysts, there are a number of negative trends in networking and telecom gear. in addition to the concern about a slowdown in spending at AT&T, the merger trend among large service providers means the overall pool of customers is shrinking. In addition, the impact of SDN, in which a new crop of software-only technology companies provides networking gear that can run on cheaper, standard server platforms, could put margin pressure on traditional networking companes. 

MKM Partners Managing Director and communications analyst Michael Genovese issued a note this morning saying he believes data networking fundamentals are still sound. He expects strong earnings from a number of companies including Juniper (JNPR), Infinera (INFN), and JDSU (JDSU), on a back of a continued optical and core network buildout. MKM also expects good results from Ciena (CIEN), Finisar (FNSR), and Cisco (CSCO).

This entry was posted on Wednesday, July 16, 2014 at 14:21 pm and is filed under Infrastructure & SDN, Investing.
Keywords: Earnings, Networking, Cisco, Alcatel-Lucent, Infinera, F5 Networks

The Rayno Report model portfolio, based on an analysis of growth stocks that trade with a reasonable valuation based on a price/earnings/growth (PEG) ratio, continues to outperform the major indices with an average gain of 14% this year (or 14.4% to be exact).

In January we announced our new picks, as we do every year. The portfolio has a record of beating the market overall since 2004, and it has never had a down year. Our lower risk PEG-based model portfolio has roared ahead this year, showing the staying power of an approach that uses valuation discipline. The overall 14.4% gain on the portfolio would have been achieved with a fully invested portfolio. With only 50% of the cash invested, (as we recommended at the start of the year), the portfolio would be up 7.2%. 

In contrast, the S&P 500 Index is up 6.18% year-to-date (YTD), which means the portfolio beat the S&P 500 even if half of it had been kept in cash. This adheres to our lower risk approach of investing less as the market climbs. 

This entry was posted on Thursday, July 10, 2014 at 14:51 pm and is filed under Investing.
Keywords: Model Portfolio, Stocks, Apple

Virtualization and Software Defined Networking (SDN) are taking over data-center networks, but many question whether the technology is ready to penetrate deeply into large, global service provider networks. An executive at at least one major service provider says we still may be many years away from that happening. 

James Walker, the president of the Cloud Ethernet Forum (CEF) and Vice President, Managed Network Services at global service provider Tata Communications, says his current focus is on connecting large-scale Ethernet services and data centers using existing technology, because SDN is not quite ready for prime time.

"SDN becomes a way for my network to interface with other networks," said Walker in an interview with the Rayno Report earlier this week. "Generally we don't have customers coming to us saying, I have a fully fledge SDN environment and I want to connect it. They say they are going to deploy it. Our Etherhet environment is very well suited to it because it's deterministic. We have the flexibility to respond to their peaks and spikes."

This entry was posted on Wednesday, July 09, 2014 at 13:46 pm and is filed under Infrastructure & SDN, Interviews.
Keywords: Cloud Ethernet Forum, SDN, Ethernet, Tata Communications, PBB

Remember how Google was the company would make money without being evil? Google's WiFi snooping may well be the biggest black mark on Google's aspirations of non-evilness.

This week, the Supreme Court declined to throw out Google's appeal that it broke the law by snooping unsecured data from private WiFi networks as its cars crawled the streets snapping pictures of everybody's homes. A federal appeals court ruled in 2013 that the U.S. Wiretap Act protects the privacy of information on unencrypted in-home Wi-Fi networks. Google is facing class-action lawsuits on the matter.

This entry was posted on Tuesday, July 01, 2014 at 14:05 pm and is filed under .
Keywords: WiFi, Google, Evil, Supreme Court

Facebook's new "Wedge" platform is the chatter of the networking world. Why is that? It encapsulates the new genre of powerful, open networking platforms, including Software Defined Networking (SDN) and Network Function Virtualization (NFV).

First off, what is it? Facebook has announced that they are building the "Wedge," their own top-of-rack networking switch. As I wrote last week on SDNcentral, this came just before several subsequent SDN announcements by companies such as Pluribus Networks and Extreme, all focused on their SDN strategy.

This entry was posted on Tuesday, July 01, 2014 at 13:25 pm and is filed under .
Keywords: Facebook, Data Center, Wedge, SDN

(Editor's Note: This is a guest post by Michael Bushong, Vice President of Marketing, Plexxi. He regularly publishes his writing on the Plexxi Blog.)

Software Defined Networking (SDN) has quickly spawned what appears in some respects to be a cottage industry of would-be disruptors to the more traditional networking approaches. With hundreds of millions of dollars in venture capital flowing into the space and dozens of infrastructure companies now vying to be the preeminent SDN vendor, how can anyone -- customers or investors -- predict who the breakout players will be?

 SDN is a How, Not a What

The most basic thing that potential customers and investors need to understand is that SDN reflects how solutions work, not what their fundamental purpose is. Whether or not something is SDN is almost immaterial to the role that the device or solution plays. Indeed, most common networking problems can be solved with both legacy solutions and their SDN counterparts. 

Think about SDN like the type of engine in a car. For most buyers, it’s a detail that gets weighed along with how much cargo space there is and how many cup holders are available. For others, the distinction between a V6 and a V8 is hugely important. But even in the latter case, the type of engine typically serves as a proxy for how much power or acceleration the car has. The real objective is not the engine but what the engine provides.

This entry was posted on Friday, June 27, 2014 at 15:33 pm and is filed under .
Keywords: SDN, Venture Capital, TAM
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