Here's two clips from Smith Barney about Sonus specifically and the enormous opportunity just for IPTV in the US:
IPTV:
Interesting IPTV Takeaways From The Alcatel Group Meeting. Early in the
morning we attended an Alcatel (ALA--$10.96, 2H by Robin Nazarzadeh) presentation
hosted by Tim Krause, Senior VP of Strategic Planning. He spoke about IPTV and the
carrier triple play. We found the following observations to be of note:
• Despite any integration and service delivery challenges the ILEC may be
having around IPTV services, the competitive challenge from the MSOs loom
large and the ILECs have to move as quickly as possible.
• By 2010 Alcatel expects there to be 72 million IPTV subscribers in the U.S.
with the carriers having spent $28 billion in capex to support the services. This
works out to about $390 per subscriber.
• Of the total IPTV capex, Alcatel believes the rough breakout will be 20% for
set-top boxes, 10% for video equipment, 10% for integration services, 30% for
IP/Ethernet/Optical transport, and 30% for the broadband access build.
• The downstream access bandwidth required for triple play services is 20Mbps
broken down as follows: 16Mbps for 1 HDTV and 2 SDTV sets, 250k for a
dedicated gaming channel, 220k for two voice lines with “vision”, and 3Mbps
for high speed Internet.
• A triple play network requires 10x the bandwidth of a double-play network
(high speed Internet and voice only). Also about 1/10 of the subscribers can be
assigned to each GigE port when IPTV is added to the service mix.
Sonus:
Sonus Very Upbeat On Its Position In VoIP And Opportunity In IMS: High
Order Rates In 4Q And 1Q Look To Only Be The Tip Of The Iceberg
We met with Sonus' (SONS--$4.39, 1S) CEO, Hassan Ahmed, and CFO, Ellen
Richstone. Hassan repeatedly made the point that Sonus is being adopted by
more customers, larger customers, in more countries, in more complex
networks, and as more of a strategic partner. Sonus is one of the few
networking companies to proactively adopt FASB 972, which prevents revenue
recognition on orders until post shipment obligations are completed. As
investors in the shares are aware, this is causing some rather long revenue
conversion cycles on orders.
High Bookings Levels In Last Two Quarters Look To Be The Result On Many
Initial Customer Deployments Rather Than Few Large Deployments, Which
Implies Good Visibility To Future Order Growth. Sonus explicitly stated its
1Q book-to-bill was "almost 2.0" and we believe it may have been even higher
in 4Q. Typically, a Sonus customer begins with a rather small initial
deployment before rolling out to a multiple city build. Hassan implied that
good initial order strength from multiple new customers drove the high
bookings levels in 4Q and 1Q and that visibility to order growth from these
and other existing customers is solid. We believe this strongly implies
that while there cold be some Q-Q ups and downs on the revenue line due to
recognition issues, Sonus' sustainable level of revenues is meaningfully in
excess of the numbers reported in the last couple of quarters.
As We Previewed With Heavy Reading, Sonus Announces Its IMS Strategy. IMS
(IP Multimedia Subsystems) is an evolving standard meant to address how a
carrier can deliver any IP service over any IP network, and is being
embraced by the industry as the most promising way to convergence service
delivery on wireline and wireless networks. Media gateways and SIP (Session
Initiation Protocol) are both key pieces of IMS and Sonus is a leader in
terms of installed base of these technologies. With the introduction of the
IMX multimedia application service platform today, Sonus is bridging the gap
between the infrastructure and service layers in the IMS model and is now
positioning itself as a full-fledged IMS vendor. We believe Sonus' existing
penetration of both wireline and wireless carriers (ex. AT&T and Cingular)
also positions the company well for success in its IMS strategy. |
