Here is a VERY LONG note from a Robertson, Stephens & Co. report on Local Loop Infrastructure Markets dated 6/19... I have been meaning to read this one for weeks now and finally I am going through some ot those piles..;)
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...This residential broadband imperative is evident in the flurry of trial and early deployment activity in the cable modem and ADSL world, as well as the strength of sales of current analog modem and ISDN residential access technologies. Indeed, data connectivity may represent the first step in a wide range of bandwidth-intensive consumer applications up to and including video on demand and interactive multimedia services. We believe these factors have the potential to stimulate infrastructure spending of some $30 billion through the end of 2000 in the U.S. alone.
Companies they list under Broadband access networks: BBTK, HLIT, ORTL, WSTL...
... we believe there will be more to come and that this most recent wave of communications infrastructure investment is in its relative infancy. By the end of the decade, we expect to have witnessed the birth of several billion dollar market capitalization companies in this area in addition to the growth of already estabilhed companies. To date, there has been $2.5 billion of market capitalization created in the sector, a number which we believe could rise to rival aforementioned communications megatrends. (this is strictly referring to companies they listed under Broadband access networks).
Now comes the good part...
Consolidation and Competition: The Role of the Established Players
Clearly the opportunities unfolding in the broadband access arena are not likely to be ignored by the large, established companies who participate in related market segments. We believe there are numerous sources of core value added in the broadband access area, which will allow smaller and start-up companies to differentiate themselves, and have and will continue to lead the larger players to purchase or partner with the technology leaders. These core technologies inlude broadband digital RF technologly, digital compression and transmission algorithms, broadband optical transmission and switching. Numerous examples of this trend can be identified to date as oulined in Fig. 6, with more likely to develop over time.
Fig. 6: Adding Value in Broadband Access:
Company(tiker)/Technology/ Partner/ Transaction
Amati (AMTX)/ADSL/Motorla/License/prod.development
Broadband (BBTK)/Switched Digital Video/Lucent Tech./Product dev. & mtkt.
Com21(Private)/Cable Modem/3Com/Equity investment & license
Divicom(Private)/Digital video Compression/C-Cube/Acquired for $180MM
E/O Networks(Private)/Rural Fiber in the Loop/BCE & Nortel/Equitey invest. & Product distribution
Hybrid Networks (Private)/Cable Modems/Lucent & Intel/Product devel.
Next Level Comm.(Private)/Switched Digital Video/General Inst./Acquired for $90 MM
Optivision (private)/Digital Video Compression/ADC Telecom/Equity investment
NUKO (NUKO)/Digital Video Compression/Nortel/OEM relationship
Terayon (private)/Cable modem/Cisco/Equity Investment.
It is evident that many of the larger, established players in the telecom and datacom fields, the Ciscos and Lucents and Motorolas, have been executing strategies of partnering with or acquiring companies that possess key technologies that are outside their aread of core competency (e.g. routing, switching).
Conclusion:
In summary, we believe we are in the early stages of a multibillion dollar value creation dynamic in local loop infrastructure markets. This dynamic is driven by familiar factors, competition and increasing bandwidth demand for PC connectivity, which when applied to markets separately and together have created nearly $90 billion of current market capitalization over the last 10-15 years.
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The other categories the report discusses were:
WAN & Remote Access: ADTN, ASND, CSCC, PAIR, PRMS, SHVA, STRM
Enterprise Networking: COMS, BAY, CS, CSCO, FORE, NN, XYLN
Long Distance Competition: ADCT, DIGI, TELC, TLAB
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My comments:
So these guys are catching up with what we have been saying for many months now! They seem to imply Amati could be a takover target or at a minimum they value the partnership with MOT as much as we do!
My conclusion:
I sould spend more time reading what's in my piles...;) |
