Chris this post was from Pat Mudge last night. I have not asked here if she minds me using it but here goes.
Regards to all
Glenn
To: Peter Quon (7897 )
From: pat mudge
Thursday, Nov 26 1998 2:51AM ET
Reply # of 7936
Some of us were puzzled by the dual China Post announcements from Ascend and
Newbridge this morning, so I did a little digging to see if I could find out how it
happened. It appears that when Alan Lutz announced NN was putting out a release at
the open on Wednesday, Ascend was listening and, for whatever reasons, decided to
put theirs out the same morning.
As for who got what, Newbridge won the ATM backbone and Ascend won some
access business that's shared with Lucent.
Ascend's press release was far from clear and after studying it carefully, I probably
should congratulate their wordsmiths for doing a masterful job of juxtaposing sentences.
However, you only use these tactics when you feel inadequate and I don't have much
respect for any company that would risk fooling its shareholders to make itself appear
stronger than it is.
The opening paragraph reads: "Ascend. . . today announced that the company has won
the bid to provide ATM equipment to build the China Post Multiservices Network."
They haven't said which ATM equipment, though they've made it seem as though they
were supplying it all. The next sentence reads, "The next-generation ATM network will
be the switching backbone for the nation's postal service, connecting 16 provincial
networks to support more than 100 cities." An accurate statement, except for the fact
most readers assume the ATM equipment in question is being provided by Ascend. It's
part of the multiservices network, but not Ascend's part.
The third paragraph reads, "Ascend recommended its broadband multiservice switching
system B-STDX 9000 as ATM switching equipment for the network." It goes on to
describe the B-STDX and list how many companies have already used it, yet nowhere
does it say this equipment has been chosen by China Post --- though one wonders why
they've described it. Only by reading the fifth paragraph do you find out what's actually
involved. "In this project, Ascend Communications' NavisCore will undertake the
network administration of up to 100 units of switching equipment. . . ."
Throughout the press release, there are references to the size of the project, leading the
reader to think Ascend is a major supplier. The seventh paragraph is brilliant. "Ascend
takes it as a great honor that China Post has chosen Ascend for their multiservices
network. Ascend is not only the leader in Frame Relay, ATM, IP services equipment,
but also end-to-end WAN solutions . . . ."
The truth is they've been chosen to sing in the chorus when they'd hoped to be the
leading diva.
For a little background on the contract, read the following press release put out by
Nortel:
newsalert.com.
What's not said is that Terry Matthews was part of the Canadian trade delegation and it
was during this ceremony that the China Post contract was signed. Incidentally, it was
the China Post representative who insisted NN's announcement include the term
"exclusive supplier."
NN has a long history in China and currently receives around $200 million a year from
TDM. The country is just moving into frame relay/ATM and it's likely TDM sales could
be replaced by FR/ATM over the next two or three years. Shipments for the current
ATM contract will begin this quarter and ramp in a normal manner quarter by quarter.
I've heard $20 to 25 million within a year, but those numbers aren't official.
As for NN's press release, it lays out exactly what's involved and doesn't imply more
than it is. "Newbridge Networks today announced that China Post, the State Postal
Bureau of the People's Republic of China, has selected the Siemens/Newbridge
multi-service, multi-access platform to build the core national backbone asynchronous
transfer mode (ATM) network. . . . Newbridge Networks is pleased to be the exclusive
vendor for the China Post's national backbone," said Constantin Loudiadis. . ."
In short, Newbridge grabbed the golden ring by winning the backbone and Ascend
underestimated its audience by putting out press that made the company appear
stronger than it was.
While researching the two contracts, I also learned there is no substance whatsoever to
buyout or equity position rumors. Newbridge is not talking to Siemens or Lucent or
anyone else regarding either.
Today's strength was based on winning China's backbone, analyst upgrades, and the
soon-to-be released GlobalOne contract.
That's it for now.
Pat |
