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Technology Stocks : Summa Four, Inc. (NASDAQ:SUMA)

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To: Frank A. Coluccio who wrote (12)	7/9/1997 12:02:00 PM
From: Crash	of 49

Frank, I can't really speak to the actual reasons for the recent round of high level defections, but I can make some educated guesses from what I see happening in Summa's target market and with Summa's competitors. I think that Summa's strategy and vision as a programmable switch provider is at a juncture where some important decisions concerning the market have to be made. In terms of market share, Summa is running a close race from it's nearest competitor (Excel) as the the leader in open programmable switching. In addition to other open switch vendors, Summa is now competing with the traditional switch vendors for market share( Nortel, Lucent, etc.). Given the inroads that Summa and others have made in this market, the big boys are starting to wake up to the fact that their carrier customers desire these new open architecture systems in the network. They are responding to this threat by developing these features directly on their switches. This requires the carrier to merely upgrade the switch software in order to provide these new enhanced services to their subscriber base. This coupled with the greater competition in the open switch market have contributed to Summa's decreasing revenue growth over the last year. I do believe the recent announcement concerning Dialogic integration into the Summa switch is a gamble on Summa's part to become the industy standard for open switch platforms. This is a gutsy move as it forces Summa's traditional customer (system integrators) into becoming software development firms that create service applications to sell to carriers for this common platform. This means that the hardware revenue recognized by these firms would be greatly reduced in this scenario. It will be interesting to see if this pays off in the long run. After reading the most recent 10K it appears that some of the attrition on the executive staff could also be attributed to a changing of the guard given the replacement of the CEO in Jan. Just my thoughts and humble opinions. Crash

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