Brett --
Considering the strength of my other network-related stocks, I'd expect NN to gain ground once the seller is gone.
Did you see the CSCO/CIEN news posted on the CIEN thread this morning? They outline their backbone strategy reminiscent of Churchill telling parliament war is imminent.
Since CSCO and CIEN both have to service someone --- lots of someones --- I would imagine this clarion cry will have ramifications beyond today's announcement.
>>>SAN JOSE, Calif.--(BUSINESS WIRE)--April 20, 1998--Cisco Systems,
Inc. today unveiled a five-phase strategy for building data-optimized,
service provider networks using optical internetworking technologies.
As part of its strategy, Cisco also announced today a new
high-performance interface for the Cisco 12000 Gigabit Switch Router
(GSR) and an intent to work with CIENA Corporation to enable Cisco's
high-end switches and routers to be overlaid directly onto CIENA's
optical networking solutions without the need for separate
time-division multiplexing (TDM) equipment.
Cisco and CIENA have also joined with other leading industry
participants to announce the Optical Internetworking Forum (OIF), an
open industry forum that will work to accelerate deployment of
next-generation optical internetworking products and services.
Building the New World Network
Cisco's optical internetworking strategy addresses the need for a
new, data-optimized approach to the delivery of public communications
services. The importance of data, led by the explosive growth of the
Internet and new, bandwidth-intensive applications, is generating
profound changes in service provider networks. Service providers are
now aggressively growing their packet and cell infrastructures as a
means to deliver integrated network services and applications. In this
new packet/cell infrastructure, voice becomes another data application
with strict quality-of-service requirements.
Today's public networks are based on circuit switching and are
built to meet the needs of today's voice communications. These
hierarchical, TDM networks enable thousands of 64 kbps voice
connections to be aggregated in a series of steps onto high-speed
transmission facilities. In the optical internetworking world, much of
this traditional equipment becomes unnecessary due to gains afforded
by statistical multiplexing. By statistically multiplexing packets and
cells over wavelengths in the optical network layer, switches and
routers can provide increased bandwidth efficiency and eliminate
substantial cost and complexity. The aggressive integration of data
and optical network technologies along with the emerging voice-over-IP
(VoIP) market is expected to rapidly accelerate the rollout of a new
generation of communications infrastructures.
"Optical internetworking should drastically lower the cost of
transmitting information. Such improvements will help release the
pent-up demand for multimedia communication," said Nayel Shafei, Qwest
Communications' executive vice president of product development.
Cisco's Five-Phase Optical Internetworking Strategy
Cisco's optical internetworking strategy is based on five phases
over the course of a year that deliver the technologies needed to
leverage current investments in synchronous optical
network/synchronous digital hierarchy (SONET/SDH). The strategy will
extend the optical internetworking model from the long-haul backbone
all the way to the customer premise. Phase one of Cisco's optical
internetworking strategy began with the introduction and deployment of
high-capacity platforms on which service providers could establish and
offer profitable data services. The Cisco 12000 series of Gigabit
Switch Routers (GSRs) and the Cisco 8000 WAN platform leverage the
enormous global investments in SONET/SDH infrastructure via compatible
IP and ATM optical interfaces up to 2.5 Gbps. Cisco's 1997 acquisition
of Skystone Systems Corporation gave the company access to high-speed
SONET/SDH technology and established a center of competency for
ongoing development of SONET/SDH-compatible and optical equipment.
Currently in phase two of the strategy, Cisco is delivering
switches and routers that interface directly to the optical networking
layer, avoiding the cost and bandwidth limitations associated with
TDM. Cisco's work with CIENA will enable the deployment of optical
internetworks based on Cisco's high-end switching and routing
platforms and CIENA's dense wavelength-division multiplexing (DWDM)
equipment.
Phase three of Cisco's optical internetworking strategy will
integrate key SONET/SDH and optical capabilities into Cisco switching
and routing platforms to reduce the cost of deploying fiber-based data
networks where WDM is not required. The key technologies include
long-reach capability to extend the distance over which switches and
routers can be deployed, as well as intelligent protection schemes and
optical management.
Phase four will expand optical internetworking into interoffice
and metropolitan applications, creating a data-oriented foundation to
scale high-value services to businesses, campuses and data centers. A
key element of Phase four will be the introduction of data-optimized
rings that combine the efficiencies of statistical multiplexing and
the resiliency of SONET/SDH ring architectures.
Phase five of the strategy will extend optical internetworking to
the edge of the service infrastructure and enable subscribers to
access increased network capacity and cost advantages provided by
optical networking.
"Optical and internetworking technologies are converging to allow
service providers to build networks optimized for data services at a
fraction of the cost of comparable TDM infrastructures," said Graeme
Fraser, vice president of engineering and general manager for Cisco's
Internet Service Provider Business Unit. "Cisco is committed to
driving this new packet infrastructure to have the cost, feature set
and reliability needed to enable it to be the infrastructure of the
future."
Delivers First Clear-Channel 2.5Gbps Optical Interface
A key component of phase two of Cisco's optical internetworking
strategy is the continued delivery of high-performance, high-capacity
interfaces for the Cisco 12000 series of Gigabit Switch Routers.
Cisco's new optical line card offers the world's first clear-channel
OC-48c/STM16 interface, enabling the entire 2.5 Gbps bandwidth to be
treated as a single high-speed pipe. This new interface is ushering in
a paradigm shift from TDM-based architectures to optical multiplexing.
In addition to driving dark fiber directly, this new interface will
provide the basis for high-speed interconnection of the Cisco 12000
series with CIENA's Sentry long-haul DWDM product line. Both platforms
are currently deployed by leading Internet service providers and long
distance carriers.
Pricing and Availability
The Cisco 12000 series OC-48c/STM16 interface will begin shipping
in the third quarter 1998 at a list price of $75,000.
>>>
And an article in response to the news:
<<<
By Kevin Petrie
Staff Reporter
4/20/98 1:53 PM ET
Ciena (CIEN:Nasdaq) landed a key ally in its battle with
rival Lucent (LU:NYSE).
Ciena's stock added 2 9/16 to 48 3/16 by noon Monday after
the company said it partnered with the commanding
networker, Cisco (CSCO:Nasdaq), to integrate Internet gear
and optical-fiber components in a cost-saving package for
phone carriers. Cisco was up 2 1/16 to 72 9/16. Lucent,
still the market's darling, gained 1 9/16 to 70 15/16 as
the S&P 500 slipped and the Nasdaq climbed. The shorts on
Ciena are beating a temporary retreat: The stock is up
more than 25% since April 6, though it still trades below
the low-60 level reached early this year.
Ciena has been battered by investor concern about delayed
contracts for its optical-fiber products and
saber-rattling from competitor Lucent. While it's hard to
fix a dollar value on the long-anticipated deal with
Cisco, Ciena clearly has added another dimension to its
growth track.
Ciena technology, called dense wavelength division
multiplexing, or DWDM, enables phone carriers to send
multiple channels of light signals through a single strand
of optical fiber. Phone carriers are installing DWDM in
order to ease bandwidth constraints caused by the
Internet. This month Ciena shipped its first 40-channel
units, which it can scale to 96 channels at the customer's
bidding. Lucent has only shipped 16-channel units,
although it promises to give AT&T (T:NYSE) an 80-channel
unit to test by year-end.
The plan, unveiled Monday, is to stitch Cisco's 12000 GSR
router -- a large, complex computer that phone carriers
use to ship data -- into Ciena's DWDM systems. A Ciena
official says the new products will be available this
summer. Lucent missed this chance to promote its DWDM
products; a Lucent official wouldn't say whether it has
been in talks with Cisco.
Jeffrey Diecidue, managing director at Unicom Capital,
which owns shares of Ciena, says the Cisco deal
underscores the ways that DWDM can expand its uses across
a network. He wouldn't say whether he's buying Ciena
Monday.
The Cisco-Ciena deal might spell lost business for Lucent
in another way -- down the road it might help supplant
other network gear called SONET, which is built by Lucent
and peers such as Northern Telecom (NT:NYSE). A phone
carrier "can take data traffic out of the router, plug it
into the DWDM and run it coast to coast without SONET
equipment," says Ciena spokesman Denny Bilter.
The alliance "definitely could put them a step ahead of
the Lucents of the world" in this market, says Craig
Armstrong, principal at the PITA Group consulting service
for technology purchasers.
Cisco will dominate the DWDM business if it takes off in
coming years, Armstrong says, pointing out that in late
July it acquired the private concern Skystone for its
optical technology.
In a concurrent announcement Monday, Cisco sketched for
investors a five-phase plan to integrate its switches and
routers with fiber-optic systems for cost-saving uses
throughout the network. Cisco, which excels with corporate
customers, has recently trained its efforts on building
business with carriers. However, AT&T's recent
high-profile outage might center on a faulty data product
from Cisco, which might bolster Ascend's (ASND:Nasdaq)
position with carriers.
In mid-February Ciena reported profits of $39.8 million,
or 37 cents per share, for the quarter ended Jan. 31, up
from $13.1 million, or 13 cents per share, one year
earlier. Revenue grew to $134.3 million from $53.9
million. While Ciena beat First Call expectations by 2
cents, many investors sold shares as it warned that the
major customer WorldCom (WCOM:Nasdaq) will slow orders
until later this year, leading to flat or lower revenue
for the April quarter.
Both Ciena and Lucent are seeing bullish action in the
options market today. Ciena, not a huge volume trader, has
seen more than 400 of its May 50 calls change hands in
early trading. The price of the contract, which has open
interest of just 489, rose 1/2 ($50) to 2 ($200) today.
Lucent, one of options traders' new darlings, has seen
more than 5,300 of its May 70 calls trade today, The price
of that open also was up slightly, 3/4 ($75) to 4 5/8
($462.50). Open interest in the Lucent May 70 calls was
deeper, with more than 16,400 contracts in play.
The action and open interest levels indicate bullish
sentiment on both companies, traders said. >>>
Later --
Pat |
