SCMR, CIEN have highly coveted Opt swit
by: lakers_w 02/16/01 05:53 pm EST
Msg: 48798 of 48798
thestreet.com
Ciena, which also makes transport products, has the market lead in optical switches and said Thursday that it expects its switch sales to exceed 10% of its sales this year. The Linthicum, Md.-based all-optical shop lists 11 customers for its CoreDirector switch, with big-spender Level 3 (LVLT:Nasdaq - news) the most recent addition to the list.
Ciena's president and chief operating officer, Gary Smith, said the shifting winds in the industry are moving firmly at his company's back. Some analysts agreed. "Ciena and Sycamore are in pretty good shape in terms of what they offer and where the market is headed," said the unnamed Wall Street analyst.
Nortel's CEO John Roth continued to deny that Ciena was swiping market share from his company. But to support his point, Nortel held up market-share figures for the transport products. Nortel cannot gauge its optical switch market with no optical switch to offer.
A Nortel spokesman couldn't resist a parting shot at a rival upstart. "It's easy for [Ciena] to show growth; they have a smaller base," the spokesman said. "They are very small, their revenues are $1 billion a year ... we make that in two weeks."
Taking a Managerial Role
Both Ciena and Sycamore (SCMR:Nasdaq - news), along with closely held Tellium, have developed optical switches that are run by sophisticated software that serves as the brains or operating system of a network.
These switches have demonstrated an ability to manage network traffic routes and, if you believe the developers, effectively cut network operating costs by as much as 90%. The cost savings presumably come from the elimination of numerous electronic boxes and attendant devices. Optical switch fans also blow the revenue horn, saying the smarter boxes can speed up a service provider's response time, allowing it to sell capacity in lucrative short-term blocks as opposed to the traditional long lead times and long bandwidth contracts.
To be sure, the nation's sagging economy may play a larger hand in the equipment spending shifts and slowdowns. And in that sense even Ciena, which was hit less than its networking brethren Friday, remains very vulnerable.
"Ciena and Sycamore are trying to lead the way, but the question is whether the carriers are going to be able to buy anything at all," says Bill Trent, a money manager with New Jersey's employee retirement funds. "The idea that they had to keep spending to stay ahead of their competitors has gone away."
"Now," says Trent, who has positions in Ciena, Nortel, Sycamore and Lucent, "the carriers are probably not going to spend until they see the monetary advantage." |
