BCTel's General Manager Jim Grey on the Evolution of Internet Services:
bcteladvanced.com .
And other miscellaneous news:
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Dow Jones Newswires -- July 8, 1998
Newbridge Gets Switching Pdt Pact From GTE For Calif Schools
Dow Jones Newswires
KANATA, Ont. -- Newbridge Newtworks Corp. (NN) said GTE Corp. (GTE) will use the Siemens/Newbridge MainStreetXpress 36170 Multiservices Switching platform in a Californian network of 44 schools.
The value of the order wasn't provided.
In a news release, Newbridge said the Hacienda La Puente Unified School District's network enables interactive distance learning. It said its product allows Hacienda students to benefit from fully-integrated videoconferencing at a growing number of sites simultaneously over a single network.
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China news:
nikkeibp.asiabiztech.com
nikkeibp.asiabiztech.com
nikkeibp.asiabiztech.com
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Dow Jones Newswires -- July 8, 1998
Ex-Im Bank Chair To Visit Asia, Seek Deals For U.S. Cos.
Dow Jones Newswires
WASHINGTON -- The chairman of the U.S. Export-Import Bank (Ex-Im Bank) will travel to Japan, China and Thailand at the end of the month to promote U.S. involvement in deals in the region.
On the heels of President Clinton's well-publicized tour to China, Ex-Im Bank Chairman James Harmon will also spend much of his July 19-31 Asian trip in China, including Beijing and Hong Kong for three days each, as well as in Chengdu, Guangzhou and Shanghai.
Prior to visiting China, Harmon will stop in Japan for three days, where he will meet with officials at the Japan Export-Import Bank and the export insurance division of the Ministry of International Trade and Industry. After travelling to China, he will meet with officials in Thailand for a day.
The trip will be the chairman's second to Asia this year. Concerned about the impact of the Asian financial crisis on the bank's exposure, he already visited South Korea, the Philippines and Indonesia in January. This time, Harmon plans to discuss future business with government and business leaders, discuss how the bank can best serve the Asian markets and reach new sectors, and obtain a first-hand perspective on current market conditions, the spokesman said.
Despite the Asian financial turmoil that has wracked the economies of the region for a year, the chairman of the Ex-Im Bank is committed to Asia, and hopes to pursue financing for projects in China agressively, a bank spokesman said.
Indeed, especially in cases of crisis like the one in Asia, the export credit agency can fulfill its mandate of providing financing when the private sector fears taking on too much risk. By playing a special role during emergencies, the bank can help U.S. companies maintain market share until the crisis subsides.
With immense infrastructure needs, China is Ex-Im Bank's second most important market after Mexico. The bank's exposure in China amounts to $5.2 billion. Its Mexican exposure is around $6 billion. It will support about $1 billion in U.S. exports to China this fiscal year.
China offers attractive business opportunities for U.S. exporters in the power, airport and transportation, aircraft, and telecoms sectors, the spokesman said.
Ex-Im Bank provides direct loans, loan guarantees and credit insurance to promote the export of U.S. goods and services. It is open for all short-, medium- and long-term loan, guarantee and insurance programs for China.
-By Kristi Bahrenburg, tel: (202) 862-9243; or e-mail:
kristi.bahrenburg@cor.dowjones.com>>>
On Networking sector [note phone number at bottom --- in case you want to remind Ms. Tessler Newbridge Networks is also a networker].
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The Wall Street Journal Interactive Edition -- July 8, 1998
Amid Weak Results, Analysts See Better Times Ahead for Networkers
By JOELLE TESSLER
Dow Jones Newswires
Although many of the computer-networking companies should post June quarter earnings that are below year-ago results, analysts said the sharp pricing pressure and slowing demand that have plagued the industry for the past year and a half appear to have leveled off.
While most of the data-networking companies won't deliver upside surprises, Hambrecht & Quist analyst Farrokh Billimoria doesn't expect a repeat of the earnings disappointments that have become common in recent quarters.
"The industry has definitely slowed down, but it's a lot better than last quarter within the context of slower demand," said Sanford C. Bernstein & Co. analyst Paul Sagawa.
The companies that make equipment for the wide area networking market -- the telecommunications carriers and Internet service providers -- are particularly well-positioned since many emerging independent carriers are spending heavily on frame-relay and ATM switches, routers, and remote-access products, said Cowen & Co. analyst Chris Stix.
Mr. Stix said the local area networking companies should benefit over the next few quarters from stabilizing pricing, the introduction of layer 3 switches -- which can perform many of the functions of routers but are less than half the price -- and a Fast Ethernet upgrade cycle as corporations migrate their networks from Ethernet technology.
Mr. Sagawa added that LAN equipment suppliers should see seasonal strength in the June quarter since many corporations that were still sorting out their budgets in the first quarter finalized their spending plans and began investing in their networks in the second quarter.
Still, Mr. Stix warned, the local area networking companies could see a slowdown toward the end of the year as the Fast Ethernet cycle slows.
And Nutmeg Securities analyst Andy Schopick stressed that the annual growth rate for the data networking industry as a whole, which had ranged from 30% to 50% for a number of years earlier in the decade, will be well below this in 1998 for the second year in a row.
Mr. Sagawa expects the industry to grow at about 15% this year, compared with 16% to 17% last year, and 45% in 1996.
Mr. Schopick explained that while some technologies like ATM and frame relay are growing quickly, many older product families that drove industry growth for a number of years -- like intelligent hubs -- "are turning into negative growth areas." Prices have been declining rapidly for mature lines like adapters and hubs, he said.
In addition, Mr. Schopick noted, the severe economic turndown in Asia is slowing growth in the networking industry.
3Com and Cabletron Systems
Results from the two companies with quarters ended in May, 3Com Corp. and Cabletron Systems Inc., were mixed.
3Com reported operating earnings of 18 cents a share for its fiscal fourth quarter, beating the consensus estimate by a penny and its year-ago results of 12 cents. The company also reassured analysts that it has brought its channel inventories in line with lower targeted levels. 3Com had been plagued by bloated channel inventories for several quarters and slowed shipments to distributors to address the problem.
3Com's systems products business -- which includes switches, hubs, routers, remote-access concentrators and network-management software -- showed a particularly robust 22% sequential growth in sales. But sales of client-access products -- adapter cards and v.90 modems, which are based on the new 56K standard -- rose only 1% sequentially.
Cabletron, on the other hand, missed the consensus estimate by two cents a share and gave analysts cautious guidance on its near-term sales. For its fiscal first quarter, the company reported earnings of four cents a share excluding charges related to its acquisition of Yago Systems Inc., compared with 37 cents a year earlier.
Cabletron has been coping with pricing pressure, a heavy concentration of older products like intelligent hubs, limited penetration in the carrier and low-end enterprise markets and a sizable presence in shared media -- which is rapidly being replaced by switched technology in the networking industry.
Cisco Systems
Cowen & Co. analyst Mr. Stix projects Cisco Systems Inc., the giant of the data-networking industry, will report profit of 48 cents a share for its fiscal fourth quarter, which ends in July. This compares with 37 cents adjusted for a 3-for-2 stock split a year ago.
Sanford C. Bernstein's Mr. Sagawa explained that Cisco has been able to consistently outpace the industry in growth because it has a hand in so many different parts of the networking business, a position that protects it from downturns in particular product segments.
Mr. Schopick of Nutmeg Securities added that the company's aggressive acquisition strategy and its success in gaining market share -- usually at the expense of its competitors -- have enabled it to "succeed in an otherwise challenging year for the industry."
According to Mr. Stix, Cisco is benefiting from strong growth in a number of its product lines, including the Catalyst 5500 modular LAN switches; the Catalyst 2900 work-group switches; the Catalyst 8510, a layer 3 switch that began shipping in June; the 3800 access platform, which uses frame-relay or ATM switches to send voice traffic; and the AS5800 universal access server.
Bay Networks and Fore Systems
Mr. Sagawa projects Bay Networks Inc. earned 14 cents a share in its fiscal fourth quarter, ended June, compared with 15 cents a year earlier.
Bay has been struggling to compete against Cisco and recently agreed to be acquired by Northern Telecom Ltd. in what many see as the start of a wave of consolidation among the data-networking and telecommunications-equipment companies.
Year-end sales incentives, strong demand in its LAN switching business -- particularly Bay's 10/100 auto-sensing switch and its low-cost System 5000 modular Ethernet switching hub -- and contributions from the company's new Accelar routing switches should help Bay in the fourth quarter, Mr. Sagawa said.
Hambrecht & Quist's Mr. Billimoria warned, however, that Accelar will face a competitive market since Cisco, 3Com and Cabletron are all introducing their own layer 3 products. While the Accelar line began shipping in late 1997, sales didn't ramp up quickly enough to offset declining sales in older product categories like shared media hubs in the third quarter.
Mr. Billimoria estimates Fore Systems Inc., which specializes in ATM technology, earned 13 cents a share in its fiscal first quarter, ended June, compared with five cents a year earlier.
Mr. Schopick expects the company's revenue to grow by an annualized 30% this year to between $580 million and $600 million since the "opportunities in the ATM market seem to be genuinely gaining momentum."
Ascend Communications and Xylan
Mr. Stix estimates Ascend Communications Inc. will report earnings of 27 cents a share for its second quarter, ended June, compared with 31 cents last year.
The analyst said the company's core ATM and frame-relay switching business is strong, while revenue from its remote-access business should be "flat to slightly up sequentially" in the quarter.
Mr. Sagawa noted that Ascend's remote-access business has booked long-term contracts with a number of Internet service providers including WorldCom Inc.'s UUNet Technologies, GTE Corp.'s GTE Internetworking and PSINet Inc., among others. These contracts, he said, act much like annuities, producing a steady income stream.
Many analysts see Ascend as the next likely target for a voice-equipment company and believe Lucent Technologies Inc., which will be free to do pooling-of-interest deals in October, could make a play for the company then.
Mr. Schopick estimates Xylan Corp. earned 20 cents a share in the second quarter, ended June, compared with seven cents a year earlier. Xylan said after its first-quarter earnings report that it expects double-digit sequential revenue growth in every quarter of this year.
Mr. Schopick said he remains "a little nervous about their aggressive growth goals" since the company does have exposure to Asia and relies heavily on original equipment manufacturer -- or OEM -- sales to International Business Machines Corp. and to Alcatel Alsthom. OEM sales to these two companies accounted for 40% of Xylan's total sales in the first quarter.
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Joelle Tessler 201-938-5285
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