Pat,
Yes, we have to wait for news. I believe that DT and FT are unlikely to put out a big release, since they are essentially expanding existing networks. Furthermore, most big investors are well aware that NN already has those accounts - to grow market share, NN has to hang on to its incumbencies AND take new business. It is the latter that is at issue here.
As for NN revenues being withing shouting distance of ASND. Certainly true, but as you have seen from previous posts, I expect ASND's ATM business to grow more quickly than NN's. In addition, there is no comparison between the growth prospects of NN's TDM business (expected to decline 5-10% per year) and ASND's remote access business (expected to grow >25%) In addition, ASND's impressive installed base of over 7million access ports with the world's largest ISPs is an extremely powerful platform for VoIP, FaxIP, VPN, etc. Also a fact unlikely to be ignored by potential acquirors.
As for NN's situation being analogous to ASND in March. NN has missed 3 quarters, not just one; the TDM business is a time bomb that destroys visibility; and believe it or not, NN management is even more poorly regarded by Wall Street than Mory and company. Alan Lutz is a good start, but he'll need to put up a track record before anyone puts NN into a prominent place in their portfolio.
As for what gets implemented for IP over ATM. The one thing of which you can be confident is that it won't be CSI. Too much of a leap of faith for engineers weaned on distributed routing architectures. Based on discussions with Internet guys, I expect some form of MPLS to emerge as a base standard, but with each vendor adding bells and whistles to help carriers deliver differentiated services. But again, we'll see.
I agree completely on the importance of network management. However, NN's rhetoric on having a dominating lead in this area is over stated. NavisCore is viewed as a powerful and flexible management system. Preference varies from observer to observer and is genuinely split evenly. Cisco trails both.
Finally, I'm sorry I lost credibility, but I stand by my statement that the 36170 is an old platform. 3.1 software requires a major processor complex upgrade to even run - part of the reason gross margins on ATM at NN have fallen to 50% or less. From what I hear, this is a real band-aid for a fundamental design problem that will be finally rectified in the next generation switch due next year. The 36177 is a nice box, but designed as a customer premises ATM mux, competing more with the Cisco 3800 and Ascend Sahara than with the carrier edge and core switches.
So, in summary, I see potential value and substantial risk in NN. I believe ASND is a much better acquisition candidate for LU, even given the price difference. I think NN is six months from any major upward run. The good news is that I don't see NN dropping much lower either. Good Luck. |
