Latest / Bloomberg Intelligence / Acacia's Gavin on EPS: Global Explosion for Bandwidth (Audio)

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Acacia's Gavin on EPS: Global Explosion for Bandwidth (Audio) · Bloomberg Intelligence

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  Speaker 1: one percent. And that's a Bloomberg business flash. You're listening
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  Speaker 1: to taking stock with Kathleen Hays and Pim Fox on
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  Speaker 1: Bloomberg Radio. Acacia Communications reporting their first results and performance
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  Speaker 1: since the I p O that took place in May.
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  Speaker 1: Here to tell us more is John Gavin. He is
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  Speaker 1: the chief financial officer and he joins us now. John,
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  Speaker 1: thanks very much for being with us, Oh, thanks for
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  Speaker 1: having us on the call today. Tell us a little
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  Speaker 1: bit about Acacia Communications. I know they're based in Boston,
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  Speaker 1: home to Bloomberg. Tell us a little bit about the
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  Speaker 1: company and how you help traditional telecom carriers. Sure I'd
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  Speaker 1: be glad too. So little history in Acacia, founded back
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  Speaker 1: in June of two thousand and nine. We're here in
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  Speaker 1: the old Mannard Mill complex where Digital Equipment Corporation was
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  Speaker 1: headquartered for many years. What we really do is we
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  Speaker 1: build a product called a optical interconnect module, and that
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  Speaker 1: module is is a subsystem that sits into the switching
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  Speaker 1: gear for fiber optics networks. And what we do is
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  Speaker 1: we have a two silicon building blocks, a DSP, a
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  Speaker 1: SICK and a technology and those two chips have radically
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  Speaker 1: simplified building some of these high speed switching devices that
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  Speaker 1: are required for the bandwidth needed by the telecommunications and
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  Speaker 1: content service providers around the globe. So what you make
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  Speaker 1: it easier for them to build their high speed networks,
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  Speaker 1: or you make it easier for them to build them smaller,
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  Speaker 1: or you make it easier for them to go faster.
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  Speaker 1: What is it? No, that's a great question. So we
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  Speaker 1: we do almost all the above. So today one of
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  Speaker 1: the biggest problems and networks is is that the older
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  Speaker 1: fiber optics systems were either ten or forty gigabyte. And
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  Speaker 1: because of the explosive demand for all the applications out there,
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  Speaker 1: be it voice based, be it mobile, be a cloud computing,
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  Speaker 1: all of those applications now have increased the worldwide demand
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  Speaker 1: for capacity. So our products have taken those switching capacities.
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  Speaker 1: So at the core of what we do, we take
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  Speaker 1: the LightWave signals, we convert them to digital signals and
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  Speaker 1: back if need be, at very very high speeds. So
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  Speaker 1: by being able to increase the capacity of the of
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  Speaker 1: the devices that they have, they're able to almost instantly
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  Speaker 1: increase their throughput capacity to handle these ever increasing workloads
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  Speaker 1: that are that are proliferating the networks around the world today. John,
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  Speaker 1: it also seems that you've been able to at least
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  Speaker 1: turn some investor money into even more investor money. Your
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  Speaker 1: stock is of forty you see, your stock is of
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  Speaker 1: forty percent today. Yes, you have a lot of happy
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  Speaker 1: people there. We have a lot of happy employees, we
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  Speaker 1: have a lot of happy investors, and it's it's been
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  Speaker 1: a very good day for occasion. Yeah. I mean, obviously
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  Speaker 1: if you double your revenue year over year, that kind
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  Speaker 1: of thing tends to happen. How how is that doubling happening.
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  Speaker 1: Are you winning business from competitors, or is this business
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  Speaker 1: just growing so much where you're operating in China and
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  Speaker 1: Germany here in the US. Well, that's a great question.
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  Speaker 1: I think what's happening right now is that there's a
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  Speaker 1: glow mobile explosion and need for bandwidth build out the
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  Speaker 1: sheer rock capacity, and that's happening at various parts of
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  Speaker 1: the network. So originally the long haul part of the network,
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  Speaker 1: these are these are very long connections sometimes under the sea,
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  Speaker 1: trans specific Transatlantic. A lot of those connections were upgraded first.
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  Speaker 1: Now we're seeing this second wave where the metro location,
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  Speaker 1: so these are a lot more connections in major metropolitan
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  Speaker 1: areas across the world needing this increase or upgrade incapacity.
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  Speaker 1: And then, as you said earlier, there are certain markets
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  Speaker 1: that are real high growth right now, is particularly in China,
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  Speaker 1: where there is really almost a national agenda to upgrade
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  Speaker 1: their infrastructure so that their internet backbone activity can be
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  Speaker 1: at at a much highest throughput level. So there's a
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  Speaker 1: lot of market moving factors that have created global demand
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  Speaker 1: for our products that we support our customers for. Yeah,
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  Speaker 1: your three year growth in China is more than in Germany.
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  Speaker 1: You're basically tripling over three years. Um, where's your where
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  Speaker 1: is your focus right now? Because those two markets are
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  Speaker 1: bigger for you than say the US or other European nations. Yeah,
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  Speaker 1: those maybe more traditional market growth areas for US, but
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  Speaker 1: we're really seeing a trend of global demand for these products. So,
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  Speaker 1: for instance, in North America, there are a lot of
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  Speaker 1: the web scale service providers who are now starting to
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  Speaker 1: build out next generation networks of their own networks, and
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  Speaker 1: so they're starting to be at the beginning parts of
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  Speaker 1: ramping up their capacity in order to service their customers better.
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  Speaker 1: So we're really seeing demand factors across the board globally
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  Speaker 1: increase for the types of products that we produce, John,
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  Speaker 1: are you hiring right now? What kinds of positions are
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  Speaker 1: you looking to fill? Yees? So that's a great question.
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  Speaker 1: We're always hiring. Um, we have very technical product as
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  Speaker 1: you can imagine, so we're always looking for are people
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  Speaker 1: who have optical and electrical engineering expertise. Uh, we're hiding
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  Speaker 1: across the board. In terms of operational activity, a lot
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  Speaker 1: of what we do is very complex manufacturing. So our
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  Speaker 1: operations team is is growing as well, so it's really
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  Speaker 1: across the board in a lot of technical disciplines and
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  Speaker 1: always looking for for the best and brightest. All right, John,
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  Speaker 1: thanks so much. John. Gavin there the chief financial officer
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  Speaker 1: of Acacia Communications three and a half billion dollar market cap,
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