Infinera Corp (INFN)

[nicmar]

Traders Go Gaga Over Infinera Prototype, Rare Earth Prices Rise, and Other Thoughts to Ponder
By Fil Zucchi Sep 16, 2011 9:45 am

As we approach yet another “most important weekend ever” in the never-ending European saga, some ideas to ponder between beers and touchdowns:

•Wednesday started off as an average day of new corporate bond issuance, but finished mighty strong with a total of $17 billion being sold at tight spreads. Intel (INTC) led the pack with $5 billion; Thursday’s issuance wasn’t too shabby either with more than $8 billion going off. The only fly: not too many junk bond deals.

•Aixtron (AIXG) took down the entire LED/LCD semi space after warning of poor sales; Veeco Instruments (VECO) now trades at 2.2x EV/EBITDA and 0.67 EV/sales; it has $578 million of cash ($14/share) and no debt. How long I can go without buying this one?

•Infinera (INFN) announced the prototype for a 500GB optical transport network solution and the stock popped almost 10% at one point; uhhh ... considering the 100GB system won’t roll out in size until 2012, I’m not sure I fall all over the 500GB toy. But 2012 is just around the corner and if Infinera's 100GB product is as hot and price-competitive as it is hyped, the stock may be on a runway to much higher prices.

•You may be right, I may be crazy, but Research In Motion (RIMM) and Best Buy (BBY) smell like the biggest value traps in recent memory.

•According to Bloomberg, US regulators are investigating whether residential mortgage lenders have adequately reserved for losses in their HELOC and second lien mortgages. Seriously?!?! Now they're investigating that?? Riddle me this: When are these regulators going to get around to the banks’ commercial mortgages? The answer is -- never. See Japan circa the last 20+ years for a summary of that movie.

•The European Financial Stability Fund and the European Central Bank are going to join forces to push a Term Asset-Backed Securities Loan Facility (or TALF) to leverage up purchases of sovereign bonds and bring in spreads. Not to get picky, but where exactly would one find the “assets” backing the sovereign “securities,” i.e. bonds? The Parthenon, clubs in Ibiza, and Italian risotto are all wonderful things, but they’d make a tough sale at foreclosure. (For those unfamiliar with the US version of TALF, it consisted of government non-recourse financing to private investors in order to leverage up purchases of mostly performing / well-collateralized mortgages, i.e. marketable securities for which the market-making process had broken down due to the financial crisis. If the securities being transacted in the TALF defaulted, the asset backing it would be foreclosed on, and the private investor and the government would share in the losses based on a pre-agreed on formula. I can tell you from first-hand experience that the US TALF program worked rather well for all concerned).

•At risk of reigniting last week’s food fight over gold (see Why Gold's Biggest Worry Is the Budding Currency War), cycles-technician Charles Nenner's trigger price to short gold was a close below $1,800. Yesterday gold closed at $1788. If you don’t know who Charles Nenner is, Google him.

•This morning the New York Times reports that China is locking down much of its production of rare-earths materials, and prices continue to rise. Despite my near-term bearishness over precious metals Northern Dynasty Minerals (NAK) remains one of my few longs in that space.

http://www.minyanville.com/businessmarkets/articles/aixtron-semiconductor-industry-led-semiconductor-companies/9/16/2011/id/36918?camp=syndication&medium=portals&from=yahoo