Question-and-Answer Session
Operator
(Operator Instructions). Our first question comes from George Notter of Jefferies & Co.
George Notter - Jefferies & Co.
I wanted to ask about the guidance for Q4 first of all, $75 million I think, some of those were a little bit higher previously. Is it fair to say that you just took the 10% guidance for the year and did nothing else but net out the first three quarters of the year or was there more of a bottoms-up analysis that you took? I would assume the revenue could be a little bit higher given all the new customers you added here in Q3 and the new ones coming online in Q4.
Duston M. Williams
It’s always a bottoms-up detailed forecast obviously. In this case, it came relatively close to equate to the 10% guidance that we had given back in June. We did outperform the consensus number a little bit in Q3 by $4 million. In this environment to assume that we’re going to continue to outpace anything is probably not a prudent assumption and that’s why we think that the 10% still makes sense for the year in total.
George Notter - Jefferies & Co.
And then just a followup, I wanted to ask you about the competitive environment. Nortel obviously has announced that they are interested in selling their optical network business. Are you guys seeing any disruption in the marketplace associated with that and is that something you’re able to take advantage of competitively?
Jagdeep Singh
Anytime a vendor announces a divestiture of a business unit, clearly customers are going to be concerned about what the future of that business unit is and who is going to end up owning it and what the support is going to be and so on. So, you clearly expect some level of impact in the customer base. With or without a Nortel announcement obviously to get customers to go without solutions instead of other competitive solutions and we think that this doesn’t in any way hurt our momentum. If anything, it clearly helps our ability to convert those customers over to an Infinera equipment.
George Notter - Jefferies & Co.
Fair enough.
Jagdeep Singh
On your customer, I don’t think I answered the question, the second part of your question on the new customers, and you are expecting to see potentially more revenue because of new customers, you’re absolutely right. Sooner or later new customers lead to additional revenue growth. As you know our customers pretty much order quarter after quarter once we get them as a customer. So, whether that happens in this quarter or next quarter or quarter after, the more customers we add, obviously the more potential revenue base that we have also. Now in Q4, historically over the last 2 years, Level 3 has come down as a percentage of our total revenues and we clearly expect that same pattern to happen this quarter. That’s not a new assumption, but there’s a lot of moving parts as we bring on new customers and some existing customers based on historical buying patterns will come down and then hopefully go back up at the beginning of the year.
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