Lucent/Stratus/Ascend/Mory/IBD interview.
Ascend Remains Network
Player, But How Long?
Date: 9/9/98
Author: Michele Hostetler
Ascend Communications Inc. isn't giving up any
ground just because the big boys on the block
want its lucrative market.
Cisco Systems Inc., Lucent Technologies Inc.
and Northern Telecom Ltd. are all pushing to sell
more gear to network service providers,
including Internet service providers.
But the much smaller Ascend long has held the
dominant spot in high-end equipment for
wide-area networks.
And Ascend is willing to mix it up. It's adding
voice technology to its data gear, again
challenging the larger players.
The Alameda, Calif.-based company last month
bought Stratus Computer Inc. for $822 million in
stock. Stratus has a signaling technology called
SS7. It lets telecom carriers move data on voice
networks.
Ascend Chief Executive Mory Ejabat recently
spoke with IBD about being a midsize fish in a
tough sea.
IBD:
How will Stratus help Ascend compete?
Ejabat:
The whole communications infrastructure is
evolving. We see data, voice and video being
transported on the same network. To do that,
you have to migrate the voice network to the
data network. There's a brain of a system that's
tied in the voice system, and not to the data
networks. That's the SS7 network. (With
Stratus), we're migrating SS7 technology into the
data network.
IBD:
How will SS7 affect the networks being built by
Qwest Communications, Williams Cos. and
Frontier Corp.?
Ejabat:
First, you have to realize that if you transport
voice over a data network, operating costs
would be less. On the other hand, these new
carriers building these massive data networks
have lots of bandwidth, so they can move voice
through that very easily and inexpensively. They
have to take advantage of existing features that
once existed only in the voice network, like
so-called number portability, 1-800 numbers and
others. The SS7 will allow them to provide that
sort of functionality over the data network.
IBD:
How does Stratus help Ascend compete against
Cisco?
Ejabat:
I don't believe we are going to be competing
against Cisco as much as it's going to be the
other way around, because Cisco does not have
the technology. At one point, we decided to
focus on the carrier market, not the enterprise
market. Cisco is strong in the enterprise market.
The technology and product that we have (for the
carrier market) is several years ahead of Cisco.
Stratus will expand our lead over Cisco.
IBD:
Nortel, which just bought Bay Networks Inc., is
taking aim at the network service provider
market. How could that merger affect Ascend?
Ejabat:
We never saw Bay as a main competitor to
Ascend because Bay has never been as strong in
the carrier market. The addition of Bay to Nortel
will not expand the carrier market for Nortel. It's
the enterprise market. That will not have as much
effect on our business as it will have an effect on
Cisco.
IBD:
Will more big mergers follow?
Ejabat:
I believe so. There is not going to be data and
telecom manufacturers anymore in separate
areas. There's going to be communications
suppliers that provide data, voice and video. We
will get more into the voice area, and companies
like Nortel and Lucent will get more into the data
area. One thing that is very obvious is that Nortel
and Lucent are trying to aim at Cisco, and Cisco
is trying to aim at those two.
IBD:
Do you think the Nortel-Bay merger will work?
Ejabat:
I don't know. Unless you have done it before and
have experience, it's going to be very tough to
do. We gained lots of experience with the
Cascade acquisition (last year). For us, it's much
easier to acquire companies because we have the
road map. But I don't believe these guys have
that (road map) yet.
IBD:
Stratus is Ascend's first voice purchase. What
other areas are you studying?
Ejabat:
We are going to expand what we have to make
our (computer network) ATM (asynchronous
transfer mode) switches more voice capable. We
want to make our remote- access product more
voice capable, so we're going to add voice
technology to our existing product line.
IBD:
Are you looking at possible acquisitions?
Ejabat:
There's no company that we're looking at, at this
point. We have our voice-over-IP (Internet
protocol) technologies and we are going to
expand on that. We are always looking at how
we can increase our technology lead. If we find a
company that can provide that type of lead, we'll
definitely look at acquiring them. But right now
we're not looking at any.
IBD:
Analysts say Ascend is a prime acquisition target
for Lucent. Your response?
Ejabat:
I cannot speculate on that. But what we have is a
technology that is very strong, that would make
us attractive to any telecom provider. Lucent is
one of them. But I think we have a great
opportunity to build a strong company.
IBD:
Is selling the company on Ascend's road map?
Ejabat:
Our plan is to stay independent. But at the end of
the day, we have shareholders and board
members, and it depends on what comes
through.
IBD:
Has Lucent approached Ascend?
Ejabat:
No, we haven't been approached.
(C) Copyright 1998 Investors Business Daily,
Inc.
Metadata: ASND CSCO LU NT SRA QWST WMB FRO
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E/TECH |
