Another WCG contract/partner!!(Sycamore Networks Nasdaq: SCMR - news), not satisfied with hyper-growth in the U.S., is pushing hard to become a major player in Europe and soon in Asia, according to chairman and co-founder Gururaj Desh Deshpande.
The Chelmsford, Mass.-based optical networking equipment provider signed London-based Storm Telecommunications as a customer this morning. Storm is a new-generation network company that has built a pan-European fiber network and is now trying to become an optical service provider.
``They will use all Sycamore products in their networks,' says Deshpande. The initial agreement is for $40 million, but the two companies will work together on the buildout of the Storm network. Sycamore stock is up $6.12 a share or 4.5% to $143 a share on the news.
Storm is the third network provider Sycamore has signed on as a customer in as many months. In February, Sycamore signed on Utfors, a Stockholm, Sweden-based service provider, and LD COM, a Paris-based French metropolitan network operator.
``The demand for optical networking equipment is the same all over the world, both in the U.S. and overseas,' says Deshpande, who also started up Cascade Communications, a company acquired by Ascend Communications, now a division of Lucent Technologies (NYSE: LU - news).
``There is a lot of interest overseas in building out the networks, and there will be a quite a bit of international growth as demands on the Internet increase,' says Deshpande. ``Globally companies are getting even more aggressive than those in US.'
Deshpande says the company will open several overseas offices--sales, research and service organizations--in order to grow aggressively. ``Our target is to have our sales split half and half between the U.S. and overseas markets,' he says. In the U.S., Sycamore has signed up two of the fastest-growing network operators--Enron Broadband Services (NYSE: ENE - news) and Williams Communications (NYSE: WCG - news).
For a company that is only two years old, Sycamore has quickly become a major optical equipment supplier and is aggressively competing with its more entrenched and well-funded rivals, Lucent Technologies and Nortel Networks (NYSE: NT - news).
BancBoston Robertson Stephens expects Sycamore to have sales of $98 million in fiscal 2000 and $171 million for fiscal 2001. The sales ramp is expected to bring losses down to 22 cents per share in fiscal 2000 from 46 cents in fiscal 1999. BancBoston Robertson Stephens expects the company to earn 11 cents per share in fiscal 2001.
Sycamore's growth reflects the strong demand for optical networking equipment. Ryan Hankin Kent, a San Francisco-based market research firm, estimates that the U.S. optical networking market will grow to more than $3 billion by the year 2002, from less than $500 million in 1998. These are numbers that make Sycamore investors go wild.
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