UBS Securities remains positive on ASND
[From the ASND thread, due thanks to Dennis]
UBS Securities Equity Research says the following today:
"We believe that the partnership that Cisco signed last year with
GTE is not going as well as Cisco had anticipated. Based on our
research we believe that Cisco has recently been shut out of two
key equipment areas at GTE, WAN switching and ADSL. In the WAN
switching area we believe that Ascend has won a large contract to
supply 200 WAN switches to the CLEC part of GTE. We also believe
that the ILEC part of GTE will continue to purchase Ascend WAN
switches. In the ADSL area we believe that Cisco was beaten out by
Fujitsu/Orckit.
HIGHLIGHTS
* We believe that recently Ascend has won a large order for the
CLEC side of GTE for 200 Ascend 9000s, 500s, and 550s.
* We believe that Ascend is in very good standing for WAN switching
on the ILEC side of GTE and will sell another 10-20 500s throughout
the rest of 1998.
* Additionally we believe that Fujitsu/Orckit has beaten out Cisco
at GTE for ADSL deployment
ANALYSIS We believe that Cisco's partnership with GTE is not going
as well as Cisco had anticipated. Last year Cisco and GTE signed a
partnership that stated that GTE could purchase $1 billion or more
from Cisco over 5 years in key product areas such as WAN switches,
routers and dial access platforms. Based on our research we believe
that Cisco has recently been shut out of two key equipment areas at
GTE, WAN switching and ADSL. In the WAN switching area we believe
that Ascend has won a large contract to supply 200 WAN switches to
the CLEC part of GTE.
We also believe that the ILEC part of GTE, which is completely
separate from the CLEC side, will continue to purchase Ascend WAN
switches. In the ADSL area we believe that Cisco was beaten out
by
Fujitsu/Orckit. The dial access business is not going Cisco's way
either, as we believe that Ascend continues to be the dominant
supplier to GTE. We do believe however that Cisco is in good
standing at GTE for routers and is selling the GSR 12008 and 7500.
Ascend Winning WAN Switch Business on Two Fronts at GTE
We believe that Ascend (ASND-39-Hold) has won new WAN switch
business at the CLEC (Competitive Local Exchange Carrier) part of
GTE and continues to sell to the ILEC (Incumbent Local Exchange
Carrier) side of GTE. The CLEC side is GTE's recent entry into the
competitive local exchange market and acts independently of the
regulated incumbent LEC business. Based on our research we believe
that within the last few weeks on the CLEC side Ascend has won a
large order for 200 WAN switches including 9000s, 500s and 550s. On
the more established ILEC side, GTE has recently increased the
number of Ascend 500s in its network to somewhere in the teens, and
will continue to install an additional 10 to 20 500s over the
course of 1998. (The ILEC side of GTE also has a large installed
base of Newbridge's 36150 Frame Relay switches). On the ILEC side
we believe that Cisco is in very poor position with regard to WAN
switches. Cisco's biggest shortfall is that it lacks good network
management which hampers the ability to easily provision service,
an area where Ascend excels.
Cisco Apparently Loses ADSL Business at GTE as Well
We believe that in addition to the loss in the WAN switching area,
Cisco has lost out on the ADSL business at GTE as well. A couple of
weeks ago Cisco purchased Netspeed, an ADSL start-up. It was
generally thought at the time that the reason Cisco purchased
Netspeed was due to Netspeed's strong standing at a couple of LECs,
namely US West and GTE. At US West Cisco/Netspeed is firmly
entrenched as the ADSL supplier. We believe however that at GTE,
Cisco/Netspeed has lost the ADSL business to Fujitsu/Orckit.
Yesterday Orckit stated that it has been selected for a large-scale
rollout of ADSL at an unspecified carrier. We believe that carrier
is GTE. It is our understanding that Fujitsu/Orckit is coming in at
very attractive price points which helped them win the business." |
