[Optimism]
Mike --
Right now I'm waiting for some word from Amati regarding the Alcatel-Cisco announcement. I think as investors we're in that middle ground where over-all ADSL milestones don't impress us and company-specific contract announcements do but they're few and far between. A year ago an announcement of this magnitude would have sent Amati's stock up a couple points.
At any rate, I'll post when I hear something and try one more time to post the transcript.
Cheers!
Pat
Cisco - Alcatel conference call, 6/23/97
I typed notes as I listened, so this is an approximation of what was said. Some words I didn't catch. Some phrases were lost while typing others. If anything doesn't make sense, you'll have to wait for a complete transcript --- or listen to a playback, though no number was given in that regard.
Participants: John Chambers, and Bob Michelay, Cisco, Jean-Paul (Joe) Chapon, Alcatel.
Time has come to develop multi-service networks --- combine services on one network or networks. Five years ago it was thought it would take a single technology. Today we recognize one single tech is not going to do it. It will be multi-technology network. This will require expertise from multi vendors. We are trying to combine techs of Cisco and ALA to make it possible to build this type of network. Both companies have the right strength and ? to do it.
To accelerate the integration of the technologies --
What each company brings to the other --
Cisco: We're bringing technology down to the desk top. Enterprise customers are looking at end to end solutions. Tying together products --- looking at how they combine enterprise network with management.
ALA - great strength in public networks. Invested in new access techs. JPC, for example. Delivered world's largest public networks. . . [we have] great experience and presence. Everything concerning voice. We will add data and routing to this.
ALA (? name of unit) is the telecom part of the Alca group. $13.8billion in sales from this unit last year.
Cisco --- $6.5billion for this coming year. 11,000 employees. Will are first or second in each market we enter.
Synergies - to market Internet solutions. Which areas? What services moving forward? What are standards of the industry?
ALA: on customer side: mobile customer now only has voice service. We need data. Desk top has voice and Internet, Email --- we are not far from video communications on PC. Backbone: voice or data will have to interface with this system. They will be multi tech. There will be effort to integrate services.
We will provide some possibilities some of the integration. How far will it bring us? In next 24 months we know what we will work on.
Chambers: strategic partnership: sustainable long-term advantage. $500million a year in incremental income. We have been committed to partnering. Recently we have restructured organization - Carto [?] is responsible for restructuring. Re: partnerships [it is] difficult to find single transaction that is 50-50. By doing 10 to 12 projects you can balance out partnership transactions.
Projects: easy to predict --
In access area: ISDN, ADSL, DSL
SONET, SDH, tag switching, ATM.
Data Voice and video integration --
[We will begin with] service sector, then enterprise, small to medium businesses.
Customer [wants?] one network. No matter which part of customer spectrum.
What are key driving applications?
25% of cost of product is in systems integration and administration. How do we minimize for customers going forward? Start with projects that have highest payback.
ALA: to remain one of leaders for public networks --
Switching --- have to make more switching evolve in more than one way: multi-functional, fixed and mobile; arch. Of software must be modified to give them an IM type arch.; have to make switches broadband capable, not just from transport but from interfacing to existing data tech. Access --- digital loop carriers to fiber in the loop, radio access, but primarily broadband, and also satellite. If world is going multi service we will have to provide data capabilities. In mobile world we will move from voice to data capabilities. Agreement makes significant contribution.
Questions --
Arrangement , is it exclusive? What time frame?
John - not exclusive. You can only strategically partner with so many players. Products in 10 to 12 areas. **** Will work with key service providers in each. **** Priorities: ADSL (listed first). From ALA --- IOS opportunities.
Lambert, Peter --- elaborate on how you'll approach IETF (?) re. routing and switching. Tag and MPOA (?) not being exclusive. Support tag switching. Desire to come to standards. Don't want 3 types of standards. Will support tag switching.
Craig Johnson - Elaborate on other partners. What does this mean for them? [specified tag switching partners.]
ALA -- tactical relationships will not end just because we make this strategic one. Obvious if we can do something in the context of this agreement, we will give preference to that.
Michelay -- Marketing to service providers and enterprise accounts --- how will we approach market? We overlap successfully. We'll use best leads in each company.
What will each company get from the other? We want input from key providers re: products. Alcatel -- voice capabilities: GSM (? might have heard this wrong) ADSL are particularily attractive.
Joe -- we have number of products in which we'll include data capabilities: routing --- if we integrate this it will be significant plus. Switch: to get broadband capability. Or connecting directly to data protocols --- very attractive.
John: whichever give pay-back the quickest.
Lambert -- over 24 mo period, is there commitment of dollars? No firm committment, but example, if we're trying to make strategic partnership [there is] $500million to each company per year, if you're doing it right. Wouldn't be worth resources and time if we didn't think it was worth it.
Lambert -- have you looked in future for a more permanent partnership? Mergers among large companies really don't work effectively. More effective to be strategic partners. Time is of the essence. This is quicker.
Duffy, Jim - Is ALA the first of your tag switching partners? More anncs coming?
John -- ALA is one of first. Won't list others. There will be steady stream of others.
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