The metro market has been slow to evolve as you probably know from CIEN reports. The key is that it is difficult to recover the cost of deployment from consumers and small businesses in that short haul market. Most of the explosive growth has been in the backbone where the carriers can recover cost more quickly as they are selling bulk contracts for capacity. LU and NT have reported 100 percent year or year growth in the long haul sectors.
You're absolutely right. I asked SDL's CEO Don Scifres if metro was picking up or slowing down and he indicated it was not slowly down and that the main stumbling block is pricing --- a catch-22. Once deployments begin, volumes will increase and prices decline. Based on Gerry Butters' comments at NGN, this market is real and will evolve. I believe Rizzone's prediction of hockey-stick growth being a year out is probably accurate. In contrast, the CEO of Osicom said pricing wasn't a factor to deployment and from that point on I didn't believe a thing he said.
Interesting, let's see if they can execute. . . .
The telecom market tends to be different from the HFC market. Because of the size of the contracts, concession are demanded and expected, let's see if the ORTL sales force can adapt. . . .
I don't have a feel for the new management yet, so I don't know how conservative they are with estimates.
I like Rizzone's background with CrossPointe Ventures. He has to know the investment community very well where under-promising and over-delivering is the key. I did overhear the CFO telling someone he'd never seen better linearity in his entire career.
At any rate, I highly recommend talking to Rizzone or Hay, either one. They seem like straight-shooters. It might be good to find out the value of their manufacturing facility as there's a clear need for more production across the board. SDL, for example, is having to hold off their third IOC customer b/c of mfg. constraints.
Pat |
