Prudential Securities, Inc. (NT, JNPR, XLNX, ZMH, LLTC, CHD, ORCL, PSFT, LNC, RJF, TMK)
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10 February 2004, 07:05am ET
NT: Reit Overweight - We believe Nortel continues to gain momentum in the carrier VoIP space, and we expect the company to build on its leading position in the market in the coming quarters. Based on our proprietary channel checks, we believe the company is well positioned to win VoIP contracts with other large carriers and this work may include VoIP business with AT&T in the U.S.
Although Nortel`s contract with Verizon is exclusive, we do not expect other contracts to be necessarily exclusive, as well. Nortel has already announced several large contracts with carriers for VoIP deployments, including an 18-month exclusive contract with Verizon, and wins with Bell Canada, Sprint, Charter, and Cox. We expect to see increased attention on VoIP over the course of 2004, as competition from cable operators, the need to reduce network operating costs, and regulatory posturing all drive North American carriers to articulate their migration plans. We also expect to see VoIP activity increase internationally, and Nortel is in several trials in Asia and EMEA. In the December quarter, Nortel stated that carrier VoIP revenues contributed over $100 million, and we expect this business to be among Nortel`s growth engines in 2004. We reiterate our Overweight rating on Nortel and $10 price target. |
