Xtera’s New CFO May be Its Only Hope
Joe Chinnici was unceremoniously let go by Ciena, as the ex-Nortel executives at the company evidently advocated replacing him. In complying to the Sarbanes-Oxley requirements, there were initial glitches in those new rules, and deals were being held up – he apparently became a scapegoat. Along with the CTO, he was an important check against the Nortel coup. Now Chinnici has taken on the major challenge of turning around Xtera Communications, which will hardly be an easy task. If the very competent executive is successful, it would be one of the most remarkable accomplishments in the history of the optical space.
Toward the end of last year, we wrote an article called, “Xtera IPO an Act of Desperation?” While it could still be debated whether the vendor was in a frantic state to exit, it certainly was very anxious to have another round of funding. Given that it had been around for so long, private funding would probably have not been an option, even if there were still interest by venture capitalists to invest money in fiber optic systems. Although we understand that there was a high level of optimism at Xtera in raising funds publicly, it had insufficient appreciation of the higher level of scrutiny involved in opening up its accounts to the world.?
With a veteran like Chinnici on the quarterly earnings calls, they will come off cleaner and clearer. There is a high likelihood that there will cease to be subtle accusations about Xtera engaging in the use of "semantics" (referred to on Q1 2016 earnings call).
Going through bankruptcy will certainly help to provide Xtera with a fresh slate. At a minimum, the supplier could be in a much better financial position to remain a viable player in the submarine market with a little bit of terrestrial business attached to those subsea cables.
There are still a good number of upgrade opportunities in the undersea space. We are aware of at least one significant network, which is still operating at 10G.
Some industry observers may believe that Xtera has done an inadequate job in promoting its very real advantages with....
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