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Technology Stocks : SONS

SONS 7.830

+2.8%

Nov 28 4:00 PM EST

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From: Cooters	2/20/2007 9:35:41 AM
	of 1575

3GSM Update from CSFB Investment Thesis. SONS is one of the leading suppliers to communication service providers of VoIP switching infrastructure. We believe that the migration by service providers from circuit to IP voice infrastructure will drive significant growth in Sonus’s operating profitability over the intermediate to LT horizon. 3 GSM Update. Our meeting with SONS CEO and Chairman, Hassan Ahmed, focused on SONS's existing momentum in delivering VoIP solutions to mobile operators and the substantial long-term opportunity to increase penetration in this market. We would highlight the following key takeaways: VoIP still in early stages of penetrating wireless networks: While SONS has established a strong position with major mobile operators such as Cingular Wireless/AT&T and KDDI in Japan, the company believes we are still in the early stages of deploying VoIP technology into mobile networks. At Cingular for example, the deployment is limited to the core network and gateway MSCs (i.e. the interface between the mobile network and the wireline network), which is being driven primarily by cost reduction. Longer-term as all IP access network technologies such as HSUPA and EV-DO Rev. A are broadly deployed, VoIP technology will be more likely to penetrate the edge/access network at mobile operators, which significantly expands the long-term market opportunity for VoIP infrastructure. While this appears to be a more significant opportunity for SONS beginning in 2008, it has already begun to materialize at KDDI in Japan. Femtocells/ Picocells - potential to accelerate adoption of mobile VoIP?: SONS also highlighted announced relationships with femtocell/picocell vendors 3Way and ip.access to provide a complete Low Power GSM solution to enhance inbuilding wireless coverage. While femtocell solutions are not likely to be deployed broadly until 2008, this solution provides the opportunity for SONS to form relationships with one or more leading European mobile operators. WiMAX deployments expand wireless opportunity: While the migration to all IP access networks by traditional mobile operators continues to be slow in most regions, increasing traction for mobile WiMAX deployments creates a new market opportunity for SONS as evidenced by customer wins with Sprint Nextel in the US and Wateen Telecom in Pakistan.

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