Doc,
I would have thought ADTN was the better buy out candidate for
ADCT over PAIR, but price was probably an issue.
********************************
Message 12952325
To: Abraham Pucheril (0 )
From: Gus
Wednesday, Feb 23 2000 2:52PM ET
Reply # of 1977
0.43 ADCT share for every 1.00 PAIR share valued at $1.6 billion.
PAIR was the early and the dominant xDSL player with its
HDSL/HDSL2 (TI equivalent) product line being used by a 1.7 million
global subscriber base. The Chairman of Broadcom is a PAIR alum.
thestreet.com
Here's an interesting angle. ORCT is the exclusive supplier to GTE which
is being merged with Bell Atlantic so this flashback is interesting
especially since that Merrill Lynch report indicated that BA is planning to
increase its ADSL business 10x in the first half of this year alone.
One of the largest setbacks for PairGain was the late 1998 loss of an
exclusive contract with Bell Atlantic for DSL services and
technology. Rival DSL company Adtran eventually won the Bell
Atlantic contract, but not before the companies slashed prices by
about 30% in a bidding war
ORCT's deal with Madrid's Radiotronica is expected to bring in $3 billion
in revenues over the next 7 years based on a reasonable 20% projected
share of the Latin America market. ORCT's deal with Fujitsu should give
them at least a healthy piece of the action of the still highly protected
Japanese market where they are driving fiber to the curb and to buildings.
Japan is still the odds on favorite to have the first major deployment of
both versions of VDSL.
China, which has the world's second largest fixed line network is next. 90
million relatively new phone lines alonside 80 million cable lines should
provide a very competitive environment (and promising market for
VDSL) once they decide on how to deregulate China Telecom with the
sustainable debt and equity structures.
At this point, ORCT looks a cinch to at least double or triple its revenue
base this year from the previous 200,000 lines/year level. Anyway, for
future reference, I'm excerpting the RBOC supply process as detailed in
the last PAIR 10K. Of the 4 major global contracts available -- BA, SBC,
DT and GTE -- SBC still seems to be up for grabs although, I wonder if
the Latin America connection will also bring in some contracts for
ORCT.
PUBLIC NETWORKS
The public network market consists of the five RBOCs and their
local telephone company affiliates, as well as independent telephone
companies, CLECs, ISPs and international carriers.
RBOCS. Prior to selling products in volume to a local telephone
company affiliated with an RBOC, a vendor must first receive
approval of our product from the RBOC. Although the approval
process for a new product varies somewhat among the five RBOCs,
the process generally consists of the following three phases:
o LABORATORY EVALUATION. The product's functions and
performance are tested against all relevant industry standards. This
process can take from two weeks to three months, or longer,
depending on a variety of factors.
o FIELD TRIAL. A number of actual telephone lines are equipped
with the product for live operation in a field trial lasting from three
weeks to three months, or longer. These field trials are for
evaluating performance,
assessing the ease of installation and establishing troubleshooting
procedures. The RBOCs grant conditional approval upon successful
completion of a new product'sfield trial, enabling field personnel to
order limited quantities of the product under one-time approvals.
o FINAL APPROVAL AND CONTRACT. Prior to final approval,
which may take from one to four months, or longer, the RBOC
develops and implements a variety of procedures that cover
ordering, stocking, installation, maintenance, returns and all other
activities associated with use of the product.
All five U.S. RBOCs and Bell Canada have approved ourHiGain
products. In addition, several carriers have approved our subscriber
carrier systems: one RBOC and Bell Canada have approved our
PG-2 system, four RBOCs have approved the PG-Flex system and
one RBOC has approved the PG-Plus system. Sales in the aggregate
to local telephone companies affiliated with the five RBOCs
accounted for approximately 55% of our total revenues in 1998. |
