Infinera Just Landed a Big Account, But Should You Buy the Stock?

Enterprise equipment vendors often tout big design wins from high-profile customers. Recently, Infinera (NASDAQ: INFN), maker of wave-division multiplexing equipment, issued a press release detailing a big achievement for its new Cloud Xpress 2 (CX2) product for data center interconnections -- a design win with Netflix (NASDAQ: NFLX).

The fact that Netflix chose Cloud Xpress is a huge vote of confidence in Infinera's technology, no doubt. Netflix is the premier video streaming service, with over 100 million subscribers in 190 countries that stream 125 million hours of programming per day. Streaming all that video requires huge amounts of bandwidth -- exactly what Infinera's products enable. Moreover, Netflix promotes itself as an arbiter of good technology, even ranking internet service providers' (ISP) speed with its ISP Speed Index on its website.

The Cloud Xpress 2 has impressive features, such as 1.2 terabyte-per-second speeds up to 130 kilometers. In addition, the new system contains software-defined features that allow Netflix's engineers to scale capacity as needed with very little provisioning. Given Netflix's huge bandwidth needs, the ability to scale up and down quickly is important so that the company does not have to pay for any more capacity than it needs at a given time.

Source: Fool.com